Restore

A small word, that for some reason is difficult for politicians to say.

In 1963, President Kennedy proposed, but did not see passed,a tax cut meant to stimulate the economy. This was heresy to New Dealers, who had raised taxes, to mostly pay for WWII, and primed the pump of the economy with federal spending. Kennedy's tax cut proposal, was actually a tax level restoration to pre-WWII levels (especially marginal tax rates).

New Dealers had learned the hard way that recessions and depressions did not come from a lack of supply, but from a lack of demand.

Cutting taxes allegedly work on the supply side of the economy, especially when rich Americans get more money and invest it in production. This promised investment would then spur more hiring, and the benefits of tax cuts would trickle down to everyone, increasing employment. This had never worked in the past because rich American either don't invest (they hoard), or invest their tax cut stupidly (witness the housing bubble of 2003 to 2008).

In 2007, the Bush's tax cuts, caused a housing bubble (increased production), killed demand when the bubble burst because consumers could not afford the houses, and wham; right into the Great Recession!

A balanced budget, with tax increases and cuts in spending, was a recipe for disaster for FDR in 1936. The New Deal recipe was to increase taxes (especially on the rich whose wealth tended to concentrate and grow even in hard times) and increase government spending. FDR famously said that mistake in 1936, to balance the budget like a household budget, was the worst mistake he ever made.

Conservative revisionist historians love to repeat that the New Deal did not end the Great Depression, but WWII did. This has some historical credibility; except it also proves the basic tenant of the New Deal. Taxes certainly went up as WWII approached, bond sales were a voluntary form of taxation, and spending went through the roof. Full employment and a booming economy resulted from this; which continued in post war America: "Tax and spend" works.

Kennedy introduced the idea that a tax cut could also stimulate the economy. And that basic idea, unfortunately revitalized the Republican Party, who had been reduced to irrelevancy from 1932 to 1952.

President Reagan, coming from Prop 13 California, instituted "supply side" economics, promising economic growth as the result of tax cuts. Democrats were successfully depicted as "tax and spend" liberals, who allegedly damaged the economy. American forgot what worked, and were lured into the poison "medicine" of tax cuts.

So, cutting taxes became a spectator sport, both for Democrats and for Republicans. As time passed, "temporary" tax cuts, became permanent because "tax increase" became a political poisonous term. And herein we encounter the little word "restore".

The payroll tax rate has been at its present rate for decades, but, consistent with what has worked for Republicans, its restoration is now depicted as a tax "increase". The payroll tax is actually the social security and medicare premium; it is NOT as tax!

Look up restore in the dictionary. The basic idea is that restoring something puts it back where it was. There is no increase!

Democrats need to start using the word restore, or restoration more.

The Reagan Revolution was based on simple tax rate restoration. But, it couldn't stop, it continued actually cutting, not restoring lower rates, forever, while the government got involved in several wars, with defense spending exploding from even Cold War levels.

This resulted in an acute revenue shortfall, that got the country into the deficit mess we are in today.

Taxes, on local, state and national levels need to be "restored" to former levels, that are more in tune with economic and defense realities. History proves that restored tax levels, balanced and in tune with social needs, actually grow the economy (Eisenhower, Johnson, Clinton administrations saw almost balanced budgets).

Cutting social programs and reducing employment, because of low revenue levels caused by tax cuts, reduces overall economic demand and causes unending recessions (depressions).

The economy can survive with a balanced approach, increase revenue by restoring some tax levels, and simply allow defense spending cuts to occur from the withdrawals from Iraq and Afghanistan. That's it, there is no more to do.

But, a political party's future depends on depicting tax restorations as increases, it is the formula that has worked so well, and Republicans have no other real policy positions! Tax cuts are why the Republican Party still exists!

Just for fun, repeat after me, raise taxes, raise taxes (you get a dull unsettled feeling don't you?)

Now repeat after me, restore taxes, restore taxes (no feeling, nothing...you wonder restore from where to where..and you learn there is history to taxation that often is justified.

Restore tax levels, sounds better, and is HONEST!