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Monday, November 08, 2010

Spinning like a TOP



I heard the spin on the Sunday shows yesterday and was flabbergasted. Democrats spun the results from last weeks elections with silky smooth and almost understandable clarity, Dems lost not because of policy but because of the economy. It is hard for incumbents to win when Americans are concerned about their paychecks. And well, there is no question that is the truth. Repeat that mantra over and over and one comes to the conclusion if the economy was just better then everything would be ducky for the Democratically elected President, Senate and House of Representatives.

But it is not! Why? Well, Mr. President, Mrs. Pelosi and Mr. Ried you had two years to work on this problem and you did not get anything, zip, zilch, nada ...well almost nothing. You passed Obamacare and you have given millions perhaps billions away and you still received the largest butt whipping in a political world since 1938.

1938.....few of us remember 1938. I do, you might recall I teach US History, so I spend a fair bit of time remembering such examples. Why was 1938 so volatile. FDR had just won the Presidency in the largest landslide in political history. FDR had won 538 electoral votes to 8 for someone who was goofily named Alf (Landon). So why did the election turn so cold for the Democrats. One 1937 was the worst year of the depression, yes the worst year of the depression. Made doubly worse because the Federal Government had spent five solid years expanding the size and scope of everything Washington and had directly or indirectly employed between 14 to 20 million Americans and the depression had worsened, got worse, bad, badder..... I thought we had learned our lesson then that big government cannot spend its way out of a recession-depression but we did not. And for those who have FDR as a hero, particularly in the African American political scheme, that lesson was missed.

There are those who clearly say the the onset of WWII brought the needed expansion to allow full employment, and it a way that might be true if you included the millions of men who were sent around the world and picked up a paycheck from the government during this time. But it is what happened after the war that held the "good times" and extended them into the future.

Franklin Roosevelt died in 1945 and during the war many of his New Deal Reforms were killed. The CCC, the WPA and the NYA because the war came first. Both Roosevelt and then Truman wanted to hold to the New Deal and its program but by 1946 something had happened. The House was controlled by Republicans 248 to 188. Americans no longer liked the big government policies of the 1930's. Truman could not pass his Revival of Roosevelt's policies. The Republicans repealed the high tax rates of 94% on income over $200,000. Dems pick on the rich often! In 1945 and 1946Congress repealed the excess-profits tax, cut the corporate tax to a maximum 38%, and cut the top income tax rate to 86 percent. In 1948 Congress sliced the top marginal rate further, to 82 percent.

Those rates were still high from the standpoint of modern non-war America, but they were the first cuts since the 1920s and sent the message that businesses could keep much of what they earned. That message was heard loud and clear. Why do you presume that business' are hoarding cash this year.


The reason is that for the last two years there have been consistent messages attacking businesses, for my liberal friends that means CORPORATIONS. Businesses where people have jobs, where retirement companies invest and buy stocks and try to make a profit. They still have profits but they are hoarding it...why? Obamacare, unease with the new tax policy. What new tax policy, well, the old one, the tax breaks created by George Bush to hold off a recession in 2000. Yes, he had one too but he did not scare business but gave them what would HELP them! Those are going away and the solution from the formerly employed folks on Capital hill was to have them expire. To raise taxes on those rich guys. I heard Phill Gramm formerly the Senator from Texas who by the way is married to an economist think tanker, said " I have never received a job from a poor person". True...all the people I have ever worked for where in several tax brackets higher than myself. Frankly, I liked them and wanted there businesses to stay lucrative. Our government should as well.

When the uncertainty with health care and the future of the tax base resolved adding a bonus for hiring and a tax break for hard goods and business investment would go a long way to ramp the business world. Demonizing those who create jobs from the Jimmy Johns sandwich shop on the corner to Microsoft is not good solid political or business practices. Why? Government does not create jobs business does.

I often ask my students if you or your family had more money to spend, translate for the Democrat less tax, what would you or your family do with it? Consistently the response is clear, we might spend some, we might save some, we might send me to school, we might take that vacation more Mom wants or we might add the second sandwich shop. That is how you expand jobs, quit taking so much money, spend less in Goverment, for those not working teach them to work and for those working let them keep more. Learned that back in 37 someone needs to teach some history to our New Democrats!

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