Press release from the Libertarian Party
Libertarian Party Says Obama Plan Based on Failed Economics
America’s largest third party says that President-elect Barack Obama’s spending plans are based on flawed economics. “If you think Obama’s economic plans don’t make sense, it’s because they don’t,” says Libertarian Party National Chairman William Redpath.
“Americans are taking a look at Obama’s economic plans and scratching their heads,” says Redpath. “And, there is good reason to do so. The theory behind his plan, Keynesian economics, has been unsuccessfully tried by multiple presidential administrations in the past. It didn’t work for President Hoover in the early 1930s. It didn’t work for President Roosevelt in the Great Depression. It didn’t work for President Ford in 1970s. Why does Obama think it will work for him now?”
“Just look at the last eight years,” says Redpath. “President George Bush did more to increase government spending during his administration than any president in American history. Yet, this is the same period in which we entered into economic decline. Is there any reason then to believe that more government spending will pull us out of this decline?”
“Keynesians believe that government can jump-start the economy by creating artificial demand through massive spending projects,” says Redpath. “This debt is later repaid with magic money borrowed from foreign countries, printed out of thin air or from tax increases. But, unfortunately, government can’t spend billions of dollars without incredible amounts of waste, through fraud or worthless projects. So, much of the money taken out of the economy, in order to jump-start the economy, is lost, leaving American taxpayers with a flat economy and even more debt to pay.”
“Politicians like Keynesian-based spending plans because it makes it easy to bring pork projects back to their districts, and they’ll be out of office before they ever have to worry about paying down the debt,” explains Redpath. “It’s all about power. It’s not about helping the American people.”
“Obama’s plans will put the United States another trillion dollars in debt while doing nothing to pull us out of the recession,” says Redpath. “Taxpayers have good reason to be skeptical of the stimulus plan because it is their money backing Obama’s multibillion-dollar boondoggle.”
The Libertarian Party recommends permanent tax cuts for individuals and businesses as an alternative to government spending projects, which have proven records of economic stimulation. The Party also states that any cuts in taxes must be offset by cuts to spending.
For a detailed explanation of the failed logic behind Keynesian economics, please visit here for a video produced by the Center for Freedom and Prosperity.
For more information on this issue, or to arrange an interview with the Libertarian Party, please email Andrew Davis at [email protected], or call (202) 731-0002.
Posted to IPR by Paulie
hmmm. I’m for eliminating all taxation. Voluntary contributions FTW. Support what your governmen is doing? Don’t want to lose it? Send in money. Simple.
These comments again miss the point. Tax cuts are not paid back later with tax hikes. Higher rates of growth due to increased incentives to earn more (keeping more of what is earned) lead to increased revenue relative to not cutting taxes. The notion that higher tax rates mean more revenue may be okay in basic accounting, but it’s terrible economics.
Vindex, I agree with one caveat:
Any spending cuts should be REAL cuts, where the actual dollar amount is reduced over the previous year, and not what I call “DC cuts”, where the dollar amount is decreased over the automatic increase from the previous year, but the net dollar amount is still a spending increase.
We’ve seen these DC cuts here in CA, which is why the state goes deeper and deeper into debt while claiming they are cutting spending, when thy are lying and really aren’t. Ditto DC.
Chuck,
There is a difference between whether a tax cut is good as in effective, or good as in sound fiscal policy. It was my interpretation of the press release that the LP was referring to the latter.
If the LP believes that “Government should not incur debt, which burdens future generations without their consent,” which comes directly from its platform, then it would (at least in my eyes) to be a violation of its platform if it did not call for spending cuts to offset any tax cut.
Additionally, it was a good point made in a press release a little while ago that a tax cut isn’t really a tax cut if its paid for in the future by higher taxes. While Government can certainly reduce future spending to pay for current tax cuts, its unlikely that it will (as has been proven by historical examples).
Milton Friedman often said that when you pass the spending, you’ve passed the tax. It’s only a question of whether it is a current tax; a future tax plus interest; or a currency debasement.
Yes eventually tax revenues grew in the aggregate after the Reagan and Bush II cuts. But at a slower rate and a lower percentage of GDP. And spending galloped ahead. The beast was not starved.
I have nothing against reducing spending. Reducing spending is a great step forward and very libertarian.
What I reject is the idea that a tax cut is not good without a corresponding spending cut. Reducing taxes both increases liberty and raises government revenue in the long run. It’s win/win.
Chuck, I do believe that when people talk about “tax cuts,” they mean “marginal tax rate reductions.” Supply siders are right up to a point — rate reductions spur investment and economic activity generally.
Personally, I view SPENDING as the tax. I think Ls should get crisper to say we want to reduce YOUR taxes, and EVERYONE’S taxes, and spending. Rate reductions can be PART of the equation, but rate reductions are NOT tax cuts.
I’ve seen this flaw over and over again in LP press releases. I don’t know what the source is, but someone needs to teach that person some economics.
Andrew Davis. Have you tried to contact him?
Examples…
http://www.mackinac.org/article.aspx?ID=48
http://www.heritage.org/research/taxes/BG1443.cfm
http://www.cato.org/pubs/tbb/tbb-0302-13.pdf
It’s a pretty good press release.
The only thing I disagree with is the idea that unilateral tax cuts would be a bad thing. Three out of the four times the U.S. experienced the biggest increases in government revenue corresponded with huge tax cuts (the fourth was under Clinton’s tax hike, which was no doubt more attributable to the Internet than tax policy). If cutting taxes means revenue goes up (which it does due to our current position on the Laffer curve), then why would any spending reductions be necessary to have a tax cut?
I’ve seen this flaw over and over again in LP press releases. I don’t know what the source is, but someone needs to teach that person some economics.
Joe,
http://www.cato-at-liberty.org/2008/12/15/are-we-all-keynesians-now/
Misallocation of capital is the result of these “bail out plans”.
Money would quickly and easily be put to work in its highest and best uses by just simply cutting all tax rates. Those who are the most efficient in production, are obviously those who are paying the most tax.
The old adage is true,…cut your losses short and let your profits run. Reward the producers at ALL levels of taxation, and do not bail out the losers like home builders, bandks, auto makers et al. who were inefficient users of capital by giving them even more!
Click on press release at top of page for original with links.
“please visit here for a video produced by the Center for Freedom and ”
Can you post a link to that?