M2RB: AC/DC live, Buenos Aires
Living easy
Loving free
Season ticket for a one way ride
Asking nothing
Leave me be
Takin' everything in my stride
Loving free
Season ticket for a one way ride
Asking nothing
Leave me be
Takin' everything in my stride
Don't need reason
Don't need rhyme
Ain't nothin' I would rather do
Going down
Party time
My friends are gonna be there too
I'm on a highway to hell
Highway to hell
I'm on the highway to hell
No stop signs
Speed limit
Nobody's gonna slow me down
Like a wheel
Gonna spinnin'
Nobody's gonna mess me 'round
Hey momma
Look at me
I'm on my way to the Promised Land
Look at me
I'm on my way to the Promised Land
There's no way for either party to deny it: Both have engaged in a spending orgy over the last decade and it MUST stop.
By Arthur Laffer & Stephen Moore
President
Obama shocked us the other day when he said, "Since I've been
President, federal spending has risen at the lowest pace in nearly 60
years." Having heard him champion the
"multiplier effects" of deficit-financed stimulus spending, we saw him
as an enthusiastic supporter of throwing other people's money at just
about any problem.
Thus, began our quest to see where we had strayed from the straight and narrow. Here's the picture.
In the chart nearby, we've plotted federal government spending on a National Income and Product Acconts (NIPA) basis as a share of total U.S. GDP from 1990 to the present. The NIPA numbers are used here as opposed to appropriations or outlays to capture the actual periods when production occurs. The stories the chart tells are amazing.
The first is how much government spending fell during President Bill Clinton's eight years in office and how low it was when he left office.
When [Clinton] became
president in 1992, government spending was 23.5% of GDP, and when he
left in 2001 it was 19.5% of GDP. President Clinton, in conjunction with
a solid Republican Congress, cut government spending by more than any
other president in modern times, and oversaw one of the greatest periods
of economic growth and prosperity in U.S. history.
Sadly for fiscal conservatives, the biggest surge in government
spending came during the last two years of President George W. Bush's
eight years in office (2007-2008). A weakened Republican president
dealing with a strident Democratic Congress, led by then-House Speaker
Nancy Pelosi and Senate Majority Leader Harry Reid, resulted in an orgy
of spending.
Mr. Bush and Republicans in Congress capitulated to and even promoted
each and every government bailout and populist redistribution canard
put before them. It's a long list, starting with the 2003
trillion-dollar Medicare prescription drug benefit and culminating with
the actions taken to stem the 2008 financial meltdown—the $700 billion
Troubled Asset Relief Program, the bailout of insurance giant AIG and
government-sponsored lenders Fannie Mae and Freddie Mac, the ill-advised
2008 $600-per-person tax rebate, the stimulus add-ons to 2007's housing
and farm bills, etc. The script had it that greedy right-wingers were
the cause of our collapse, and deficit spending and easy money the
answer.
The numbers are mind boggling:
From the second quarter of 2007, i.e.,
the first full quarter of a Pelosi-Reid dominated Congress and a
politically weakened President Bush, to the second quarter of 2009 when
President Obama assumed office, government spending skyrocketed to 27.3%
of GDP from 21.4%. It was the largest peacetime expansion of government
spending in U.S. history.
After
taking office in 2009, with spending and debt already at record high
levels and the deficit headed to $1 trillion, President Obama proceeded
to pass his own $830 billion stimulus, auto bailouts, mortgage relief
plans, the Dodd-Frank financial reforms and the $1.7 trillion ObamaCare
entitlement (which isn't even accounted for in the chart). While
spending did come down in 2010, it wasn't the result of spending cuts
but rather because TARP loans began to be repaid, and that cash was
counted against spending.
In 2011 and 2012, the pace of spending
was slowed when a new emboldened breed of Republicans took back the
House promising to end the binge. The House Budget Committee, headed by
Wisconsin Rep. Paul Ryan, has identified about $150 billion of new
spending Mr. Obama wanted in 2011 and 2012 that Republicans would not
approve.
As the chart shows, government spending as a share of GDP fell,
and taxes were not raised. But to attribute this drop in government
spending to the president or congressional Democrats would be dishonest.
Slowing spending and the decision not
to raise taxes may have prevented the Great Recession from becoming the
next Great Depression. In 1930, the Smoot-Hawley tariff was signed into
law by another weak Republican president, Herbert Hoover. Smoot-Hawley
was the largest single tax increase on traded products in U.S. history.
Not surprisingly, the markets collapsed.
Like President Obama, President Hoover proposed massive tax
increases. Unlike Mr. Obama, Hoover was successful. The highest marginal
income tax rate jumped to 63% from 24% on Jan. 1, 1932. That November,
Hoover lost the election to Franklin D. Roosevelt in a landslide.
As if Hoover's tax increases weren't enough, on Jan. 1, 1936, FDR
raised the highest marginal income tax rate to 79% with further rate
increases up to 83% coming later. Estate and gift taxes, taxes on
retained earnings, state and local taxes were also raised. This is why
the Great Depression was the Great Depression—massive deficit spending
and tax rate increases.
Today's economy is again decelerating
in no small part because on Jan. 1, 2012 we face Taxmageddon—the largest
automatic tax increase on investment and businesses in generations,
including the end of the Bush tax cuts and the more recent payroll tax
cut.
According to the Congressional Budget Office, this would drain $607
billion out of the economy next year, pushing us back into recession.
Keynesians, of course, are advising more deficit spending and easy
money. But the most amazing feature of the nearby chart, which is rarely
ever noted, is that:
When spending declined sharply the economy boomed
under President Clinton, and when spending soared under Presidents Bush
and Obama, the economy tanked.
Maybe Keynes was wrong and Milton Friedman was right when he warned
that government spending is taxation and that government can't tax an
economy into prosperity. Friedman made it clear time and again that
restraining government spending stimulates the economy by liberating
private resources.
The good news is that the tea party Republicans who took office after
the 2010 elections have completely altered the face of the opposition.
Legislation to repeal ObamaCare and Dodd-Frank soared through the House,
as did Rep. Ryan's proposed plan to curb federal spending and lower tax
rates for individuals and businesses.
Next, look for an insurrection of closet Clinton New Democrats
against their party's big-government leadership, as may have begun last
week when Mr. Clinton and other leading Democrats pronounced that all
the Bush tax rates should remain in place for another year.
The right point of focus is not at what pace spending has grown under
President Obama but instead how much more he needs to cut spending from
its bloated levels to bring the economy back to health. The huge
increase in spending as a percentage of GDP under Presidents Bush and
Obama is the reason we are experiencing the slowest recovery since the
Great Depression. As Milton Friedman understood, an economy cannot spend
or tax itself into prosperity.
Mr. Laffer is president of Laffer Associates. Mr. Moore is a member of the Journal's editorial board.
Highway to Hell - AC/DC
Living easy
Loving free
Season ticket for a one way ride
Asking nothing
Leave me be
Takin' everything in my stride
Don't need reason
Don't need rhyme
Ain't nothin' I would rather do
Going down
Party time
My friends are gonna be there too
I'm on a highway to hell
I'm on a highway to hell
Highway to hell
I'm on the highway to hell
No stop signs
Speed limit
Nobody's gonna slow me down
Like a wheel
Gonna spinnin'
Nobody's gonna mess me 'round
Hey Satan
Paid my dues
Playin' in a rockin' band
Hey momma
Look at me
I'm on my way to the Promised Land, wooh
I'm on a highway to hell
Highway to hell
I'm on a highway to hell
Highway to hell
Mmm, don't stop me
Eh,Eh,Eh
I'm on the highway to hell
On the highway to hell
I'm on the highway to hell
On the highway to
Hell
Highway to hell
I'm on the highway to hell
Highway to hell
Highway to hell
Highway to hell
I'm on the highway to hell
Highway to hell
And I'm goin' down,all the waa-ay-aay, wohh
M-on the highway to hell
Loving free
Season ticket for a one way ride
Asking nothing
Leave me be
Takin' everything in my stride
Don't need reason
Don't need rhyme
Ain't nothin' I would rather do
Going down
Party time
My friends are gonna be there too
I'm on a highway to hell
I'm on a highway to hell
Highway to hell
I'm on the highway to hell
No stop signs
Speed limit
Nobody's gonna slow me down
Like a wheel
Gonna spinnin'
Nobody's gonna mess me 'round
Hey Satan
Paid my dues
Playin' in a rockin' band
Hey momma
Look at me
I'm on my way to the Promised Land, wooh
I'm on a highway to hell
Highway to hell
I'm on a highway to hell
Highway to hell
Mmm, don't stop me
Eh,Eh,Eh
I'm on the highway to hell
On the highway to hell
I'm on the highway to hell
On the highway to
Hell
Highway to hell
I'm on the highway to hell
Highway to hell
Highway to hell
Highway to hell
I'm on the highway to hell
Highway to hell
And I'm goin' down,all the waa-ay-aay, wohh
M-on the highway to hell
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