The perennial schism: Tax cuts versus public investment in American economic governance

“ Higher taxes, actually, in many instances reduce revenues to the Federal Government because they reduce economic activity. They certainly reduce expansion of the economy, and they reduce the creation of jobs.
Three Presidents have proved beyond any reasonable doubt when you lower income tax rates, you generate economic expansion because people are just people. They just have common sense. If they know they are going to be able to keep more of their money, they are willing to go out and work harder to get more money. ”

“ Millions of Americans will lose their jobs, their homes, and their health care. Millions more will have to put their dreams on hold.
Let's be clear: We can't expect relief from the tired old theories that, in eight short years, doubled the national debt, threw our economy into a tailspin, and led us into this mess in the first place. We can't rely on a losing formula that offers only tax cuts as the answer to all our problems while ignoring our fundamental economic challenges – the crushing cost of health care or the inadequate state of so many schools ”

“ Now, in the past few days I've heard criticisms that this plan is somehow wanting, and these criticisms echo the very same failed economic theories that led us into this crisis in the first place -- the notion that tax cuts alone will solve all our problems; that we can ignore fundamental challenges like energy independence and the high cost of health care; that we can somehow deal with this in a piecemeal fashion and still expect our economy and our country to thrive. ”

“ Unemployment is at a 17 year low, the stock market is at an all-time high and continues to go up, up, up. We want to keep it going.
We’ve liberated the American economy from the Washington overreach, cutting 22 regulations for every one new regulation – the most in the history of our country by far; and, just last week we delivered a big beautiful Christmas present to the American people. Congress passed massive tax cuts for millions of working American families and small businesses and large businesses ”

“ Once we deal with the immediate crisis in housing and strengthen the regulatory system governing our financial markets, our final task is to restore a sense of opportunity for all Americans.
The bedrock of our economic success is the American Dream. It’s a dream shared in big cities and small towns; across races, regions and religions – that if you work hard, you can support a family; that if you get sick, there will be health care you can afford; that you can retire with the dignity and security and respect that you have earned ”

“ America has always been a land of opportunity, a land where, if you work hard, you can get ahead. We've become a great middle-class country; middle-class values sustain us. We must expand that middle class and shrink the underclass even as we do everything we can to support the millions of Americans who are already successful in the new economy.
America is once again the world's strongest economic power: almost six million new jobs in the last two years, exports booming, inflation down, high-wage jobs are coming back. A record number of American entrepreneurs are living the American dream. ”

“ As families across the country enjoy the summer, Americans can be optimistic about our economic future. In the past four years, our economy has been through a lot: we faced a stock market decline, a recession, corporate scandals, an attack on our homeland, and the demands of an ongoing war on terror. ”

“ And while we are grateful for everyone who found work and is earning a paycheck, it is very clear our economy is still in trouble. We added just 6,000 private sector jobs in the country last month. Overall, we added 49,000 jobs. And this at a time when we have more than 10 million people out of work, 4 million people have been out of work for six months or longer, and 2.5 million women have been driven from the workforce. Fifteen million Americans are behind in their rental payments. Twenty-four million adults and twelve million children literally don’t have enough food to eat. ”

“ For every dollar saved in cutting the growth in the Federal budget, we can have an added dollar of Federal tax reduction.
We can achieve a balanced budget by 1979 if we have the courage and the wisdom to continue to reduce the growth of Federal spending.
One test of a healthy economy is a job for every American who wants to work. Government--our kind of government--cannot create that many jobs. But the Federal Government can create conditions and incentives for private business and industry to make more and more jobs. ”

“ Help Low-Income Workers Enter the Job Market: As president, Obama will invest $1 billion over five years in transitional jobs and career pathways programs that implement proven methods of helping low-income Americans succeed in the workforce. This investment will be coupled with other measures to encourage the private sector and state and local governments to increase their support of these effective employment programs. ”

“ The way out of this recession, the way to create jobs, is to grow the economy by encouraging investment in factories and equipment, and by speeding up tax relief so people have more money to spend. For the sake of American workers, let's pass a stimulus package. (Applause.)
Good jobs must be the aim of welfare reform. As we reauthorize these important reforms, we must always remember the goal is to reduce dependency on government and offer every American the dignity of a job. (Applause.)
Americans know economic security can vanish in an instant without health security. ”

“ Keeping America competitive begins with keeping our economy growing. And our economy grows when Americans have more of their own money to spend, save, and invest. In the last five years, the tax relief you passed has left $880 billion in the hands of American workers, investors, small businesses, and families -- and they have used it to help produce more than four years of uninterrupted economic growth. (Applause.) Yet the tax relief is set to expire in the next few years. If we do nothing, American families will face a massive tax increase they do not expect and will not welcome. ”

“ To create economic growth and opportunity, we must put money back into the hands of the people who buy goods and create jobs. (Applause.)
We must act quickly. The Chairman of the Federal Reserve has testified before Congress that tax cuts often come too late to stimulate economic recovery. So I want to work with you to give our economy an important jump-start by making tax relief retroactive. ”

“ We met our challenges before, and we can meet them again.
As for our first goal—economic growth-our position is clear. We've seen from the mistakes of the past and from the recent recovery that our economy grows best when earnings flow not to government, but stay with the people and in the economy. That's why we must meet the challenge of simplifying our tax system, making it more fair, easier to understand, so we can bring personal tax rates further down, not up. ”

“ We must follow through on the policies that have given us 25 months of economic growth by simplifying our cumbersome tax codes and lowering rates still further, while making sure that the overall burden of government on our private economy grows no bigger.
After we've come so far, we must never turn back to the old destructive habits of taxing and spending. With a future beckoning so brightly, we must move forward on the optimistic path of economic growth and expanding opportunity. Don't let anyone underestimate America. ”

“ There is a cloud hanging over the American economy, and that's the possibility that the tax-and-spend mentality will return to Washington and take us back to those bad old days of sky-high taxes, double-digit inflation, and 21 1/2 percent interest rates. ”

“ In addition, especially in the area of capital gains, if you have a fair capital gains rate, which is what we have today, it causes people to go out and sell an investment which they might otherwise hold on to. ”

“ When they sell that asset, what happens? Two things which are very good for the Federal Government happen. No. 1, capital gains occur so we get revenues; otherwise, we would not get those revenues because people would just sit on those assets; they are not going to sell them and pay the high tax rate. When you have a fair tax rate, they sell them, the Federal Government gets the revenues, and the second thing that happens is they take that new money they have from the sale of that asset and reinvest it. By human nature, they reinvest it in something that is more productive. ”

“ It is not fair to again tax the shareholder on the same profits. To boost investor confidence, and to help the nearly 10 million seniors who receive dividend income, I ask you to end the unfair double taxation of dividends.
Lower taxes and greater investment will help this economy expand. More jobs mean more taxpayers - and higher revenues to our government. The best way to address the deficit and move toward a balanced budget is to encourage economic growth - and to show some spending discipline in Washington, D.C. We must work together to fund only our most important priorities. ”

“ It keeps the most important incentives for business investment that we won in 1981-our tax bill. And while making sure every business pays a fair-share minimum tax, it brings down the overall corporate tax rate to 34 percent. The other industrial countries of the world know what this means. In almost every one, voices are now saying that the new American tax system will make U.S. businesses more competitive and that maybe they'd better get busy and lower their own tax rates, or lose out to us. ”

“ They will be the entrepreneurs who create the job. As a result, they will make an investment which is taxable. But if you have a tax rate that is too high, which is what the other side of the aisle likes to have, then you basically create an atmosphere where these folks are going to go out and invest a fair amount of their money in things that are tax avoidance, legal tax avoidance but tax avoidance. They are going to invest in nontaxable events, stocks and bonds that do not generate income to them that is taxable. ”

“ We will call upon the American people for support and upon every man and woman in this Chamber. Together, we can pass, this year, a tax bill for fairness, simplicity, and growth, making this economy the engine of our dreams and America the investment capital of the world. So let us begin.
Tax simplification will be a giant step toward unleashing the tremendous pent-up power of our economy. But a second American Revolution must carry the promise of opportunity for all. It is time to liberate the spirit of enterprise in the most distressed areas of our country. ”

“ More important, we're making progress with the three keys to reducing deficits: economic growth, lower interest rates, and spending control. The policies we have in place will reduce the deficit steadily, surely, and in time, completely.
Higher taxes would not mean lower deficits. If they did, how would we explain that tax revenues more than doubled just since 1976; yet in that same 6-year period we ran the largest series of deficits in our history. In 1980 tax revenues increased by $54 billion, and in 1980 we had one of our all-time biggest deficits. Raising taxes won't balance the budget ”

“ That is a philosophy that should and has been rejected as we move toward a much more market-oriented economy. It is also a philosophy that presumes the higher taxes always generate more revenue to the Federal Government, which is not true. ”

“ We also know it will create a Tax Code that is taking a lot more money out of Americans who work hard. We happen to believe, on our side of the aisle, we should let Americans keep the money they earn as much as possible, have a fair tax system, and as a result generate a benefit to working Americans by saying: Listen, if you are going to work hard, we are going to give you more money. We are also going to get more revenues, which is the way this has worked out.
Why have we gotten more revenues even though we reduced the tax burden on the American people? ”

“ It is a huge jump in revenues we didn't expect--or at least the Congressional Budget Office didn't expect--but which we received because human nature kicked in and people were willing to sell assets, take that money and reinvest it in things that are productive, create jobs, and as a result we got those revenues. That is why today the Federal Government is actually getting more in revenues than it got under the old tax law where the rates were a lot higher. That is why we have gotten more economic expansion, more jobs. ”

“ You have doubled the child tax credit from $500 to $1,000, reduced the marriage penalty, begun to phase out the death tax, reduced taxes on capital gains and stock dividends, cut taxes on small businesses, and you have lowered taxes for every American who pays income taxes.
Americans took those dollars and put them to work, driving this economy forward. The pace of economic growth in the third quarter of 2003 was the fastest in nearly 20 years; new home construction, the highest in almost 20 years; home ownership rates, the highest ever. Manufacturing activity is increasing. ”

“ What we have done is we have created a tax law where essentially high-income people are willing to go out and take risks and do it in a taxable way that generates revenue back to the United States. As a result, we have the top 20 percent of American income earners pay more in taxes today, significantly more than they did under the Clinton years. ”

“ The top 20 percent of people with income in this country are paying 85 percent of the Federal tax burden. Under the Clinton years, the top 20 percent of people with income paid 81 percent of the Federal tax burden. So even though we have cut rates, we have actually created more revenues from high-income individuals. ”

“ The tax law--even though we are generating a lot more revenue for the Federal Government, even though we are well over that mean number of 18.2 percent of gross national product, even though we have had jumps in revenue of 11 percent, 9 percent, 15 percent--we actually have a tax law today that is generating more revenue but is also more progressive. High-income individuals are paying more of the tax burden. Low-income people are getting more money back from the Federal Government. ”

“ Businesses will suffer because customers will have less money to spend. The longest these cuts remain in place, the greater the damage. Economists estimate they could eventually cost us more than 750,000 jobs and slow our economy by over one-half of one percent. ”

“ Tell them not to vote to raise taxes on working Americans during the holidays. Tell them to put country before party. Put money back in the pockets of working Americans. Pass these tax cuts.
We’re all in this together. The more Americans succeed, the more America succeeds. And if we remember that and do what it takes to keep this economy growing and opportunity rising, then I’m confident that we’ll come out of this stronger than before. ”

“ Vice President Harris and I just received a briefing from our economic team, and we remain in a once-in-a-century public health crisis that’s led to the most unequal job and economic crisis in modern history. And the crisis is only deepening. It’s not getting better; it’s deepening.
Yesterday, we learned that 900,000 more Americans filed for unemployment — 900,000. They join millions of Americans who, through no fault of their own, have lost the dignity and respect that comes with a job and a paycheck. So many of them never thought they’d ever be out of work in the first place. ”

“ For the past five years, we have worked to bring the spark of private enterprise to inner city and poor rural areas with community development banks, more commercial loans into poor neighborhoods, cleanup of polluted sites for development.
Under the continued leadership of the vice president, we propose to triple the number of empowerment zones to give business incentives to invest in those areas. We should. We should also give poor families more help to move into homes of their own, and we should use tax cuts to spur the construction of more low-income housing. ”

“ The President put forward with his economic team a series of principles and a framework that combined both tax cuts for families, tax cuts for small businesses -- I think one out of every six dollars in there right now is tax cuts for businesses -- but also direct spending to create jobs, to create private-sector jobs. And I think the President -- the President believes that through that, we have a balance that he feels will save or create 3 to 4 million jobs and get the economy moving again. ”

“ The House of Representatives will once again refuse to prevent default unless the rest of us accept their cuts-only approach. Again, they will refuse to ask the wealthiest Americans to give up their tax cuts or deductions. Again, they will demand harsh cuts to programs like Medicare. And once again, the economy will be held captive unless they get their way. ”

“ Aside from the wisdom of going to war as Bush wants, I am troubled by who pays for his capricious adventure into world domination. The administration admits to a cost of around $200 billion!
Now, wealthy individuals won't pay. They've got big tax cuts already. Corporations won't pay. They'll cook the books and move overseas and then send their contributions to the Republicans. Rich kids won't pay. Their daddies will get them deferments as Big George did for George W.
Well then, who will pay?
School kids will pay. There'll be no money to keep them from being left behind — way behind. ”

“ We should have tax cuts this year, but they should be the right ones, targeted to working families to help our economy grow—not tax breaks that will help only a few while putting our prosperity at risk. I have proposed a program of targeted tax cuts that will give a middle-class American family substantially more benefits than the Republican plan at less than half the cost. Including our carefully targeted marriage penalty relief, two-thirds of the relief will go to the middle 60 percent of American families. ”

“ Our tax cuts will also help to send our children to college, with a tax deduction or 28 percent tax credit for up to $10,000 in college tuition a year; help to care for family members who need long-term care, through a $3,000 long-term care tax credit; help to pay for child care and to ease the burden on working families with three or more children ”

“ So they brought out a budget which is going to increase taxes on Americans by about $700 billion. It is the largest tax increase in the history of the country, should that budget actually come to fruition--and it looks like it is going to pass, and I assume they are going to follow up on it. ”

“ It is a theory that says you just raise taxes. The Federal Government will get more money, and we will spend it for you. In other words, there is a theory that says we are smarter than you. We have been elected to the Senate. ”

“ My fellow Americans, the news on the economy, the balanced budget agreement, they should give us confidence; they should validate our faith; they should erase our doubts. Let us now reach across party lines and seize our chance to balance the budget and maintain that strong and active faith that will ensure that our best days as a nation lie still before us. ”

“ There will be plenty of debates and disagreements, and neither party will get everything it wants. Both sides will have to compromise. That’s what it will take to do what’s right for our country. And I look forward to working with members of both parties to produce a responsible budget that cuts what we can’t afford, sharpens America’s competitive edge in the world, and helps us win the future. ”

“ Indeed, we must make these investments and tax cuts in the context of a balanced budget that strengthens and extends the life of Social Security and Medicare and pays down the national debt.
Responsibility and Crime
Crime in America has dropped for the past seven years--the longest decline on record, thanks to a national consensus we helped to forge on community police, sensible gun safety laws, and effective prevention. But nobody believes America is safe enough. So let's set a higher goal: let's make America the safest big country in the world. ”

“ Fiscal restraint must be continued in the years ahead. Budgets must be tight enough to convince those who set wages and prices that the Federal Government is serious about fighting inflation but not so tight as to choke off all growth.
Careful budget policy should be supplemented by other measures designed to reduce inflation at lower cost in lost output and employment. These other steps include measures to increase investment--such as the tax proposals included in my 1982 budget--and measures to increase competition and productivity in our economy. ”

“ Now, any society which would listen to this sophist, burden itself with taxes to satisfy him, and not perceive that the loss to which any trade is exposed is no less a loss when others are forced to make up for it,—such a society, I say, would deserve the burden inflicted upon it.
Thus we learn, by the numerous subjects which I have treated, that, to be ignorant of political economy is to allow ourselves to be dazzled by the immediate effect of a phenomenon; to be acquainted with it is to embrace in thought and in forethought the whole compass of effects. ”

“ High inflation, high unemployment, high taxes, low productivity, and various other challenges had sowed widespread doubts about the continued vitality of our economy, while encouraging America's political leaders to place more faith in the growth of government than the wonders of free markets. ”

“ So I hope Members of Congress will find the same sense of urgency and bipartisan cooperation to help the families still in the crosshairs of these cuts. They may not feel the pain felt by kids kicked off Head Start, or the 750,000 Americans projected to lose their jobs because of these cuts, or the long-term unemployed who will be further hurt by them. But that pain is real.
The American people worked too hard, for too long, rebuilding from one economic crisis just to see your elected officials keep causing more. Our economy is growing. Our deficits are shrinking. ”

“ This morning, we’ve learned that our economy created 900,000 jobs in March. It means the first two months of our administration has seen more new jobs created than the first two months in any administration in history. But we still have a long way to go to get our economy back on track after the worst economic and job crisis in nearly a century. ”