Monday, March 05, 2007

Cheney Sets Out Case for Tax Cuts

On Thursday Dick Cheney spoke at the conference I was attending in Washington. He spoke a bit about tax cuts - he didn't talk about 'sharing the proceeds of growth'. He talked about the benefits of tax cuts to the economy and used concrete examples to show how they have worked.

We recognize that nobody can sit in an office in Washington, D.C. and decide to make America prosperous. Our job is to preserve the freedoms that gave birth to this nation, to encourage free enterprise, and to give people confidence that their hard work will be rewarded, not punished. And that begins with leaving more money in the hands of those who earn it.

For that reason, at the start of our administration, President Bush asked Congress to pass significant, broad-based tax relief. The House and Senate responded with historic pro-growth legislation. We reduced taxes for every American who pays income taxes. We doubled the child tax credit, reduced the marriage penalty. And in 2003, we accelerated the rate reductions; we created new incentives for small businesses to invest. And in order to lower the cost of capital, and to encourage firms to expand and hire new workers, we reduced the tax rate on capital gains and dividends.

Now the evidence is coming in -- and the Bush tax relief has proven to be exactly the right policy for our country. If you think of all that's happened in the last six years -- the recession we inherited, terrorist attacks, corporate scandals, natural disasters, a tripling in the price of oil -- it's remarkable how resilient this economy has been. In fact, since 2001, our GDP has grown by 16 percent. Let me just put it in perspective: In only six years' time, the American economy has expanded by an amount greater than the entire economy of Canada. The late Milton Friedman said that "Most economic fallacies derive from the tendency to assume that there is a fixed pie -- that one can gain only at the expense of another." We've shown once again that the right policies can make the pie a lot bigger, and that the gains can be widely shared. We've also disproved maybe the biggest, most persistent fallacy in Washington -- and that's the idea that pro-growth tax cuts are inconsistent with fiscal responsibility.

The fact is that pro-growth tax cuts once again have helped to drive an economic expansion and generated higher than projected revenues. You might also recall that back in 2004, President Bush set a goal of cutting the deficit in half by 2009. This
pledge was greeted with skepticism, to put it mildly. Yet we met that target in 2006, three years ahead of schedule. All told, federal tax receipts have gone up by more than $520 billion in the last two fiscal years. That's the largest two-year increase in history. By now it's time for even the skeptics to admit that a lower federal tax burden is a powerful driver of investment, growth, and new jobs for America's workers. And that increased economic activity, in turn, generates revenue for the federal government... On the revenue side, we're going to keep working on a low-tax policy that promotes growth and keeps government within its proper limits. Under present law, many of the Bush tax cuts are still set to expire over the next few years. We feel strongly that Congress should make all the tax cuts permanent -- and that
includes ending the federal death tax.

I know we've got some Democrats with big ideas for taxes they want to raise. They ought to realize that no nation has ever taxed its way to prosperity. And if they try that, they're going to find out what the rest of America already knows -- that President Bush is a man of principle and a man of his word.

48 comments:

Anonymous said...

What about the Federal deficit? The Republicans used to call for a Balanced Budget Amendment to the Constitution but now they have massively increased the deficit whereas Clinton put the country on the path to abolishing it.

Of course tax cuts are a good thing but it would have been better if the Republicans hadn't increased spending as well.

Anonymous said...

Cheney's no economist and by the sounds of it, neither are you Iain.

In fact, you don't need to be a brainbox, just look how the US government debt has soared and praising the US economy's strength looks a bit dumb given the turmoil on the markets today. The outlook, with house prices falling and the dollar taking a tumble isn't very promising.

Tax cuts are fine, indeed a good thing, but they should be the result of fiscal reform and a means to an end, and not the end in itself. The Republicans have ramped up spending, aka Pork Barreling, in a manner that would make a French Socialist blush.

Anonymous said...

Ah, Dick 'deficits don't matter' Cheney. Apparently, what modern conservatism is really about is having your cake, eating it and sending your grandchildren the bill (plus interest).

kris said...

Hello! The TRILLION dollar deficit! Social Security hitting the buffers when Clinton had cashed it up! Dick Bloody Cheny is a miserable bastard and around long past his sell-by date circa 1985.

BTW, has Dick taken a look at the stock markets lately? His week dollar policy has propped things up- probably to the day those muppets leave office- but there are some big challenges ahead.

Newmania said...
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Anonymous said...

Iain - leave the economics to economists...

What do you think the impact on savings has been? Do you know why savings matter? Or how they interact with long term prosperity?

Anonymous said...
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Dr.Doom said...

'No nation ever taxed its way to prosperity'

What amuses me somewhat is that George Osborne and Dave will nio doubt be playing the 'stealth tax' card come election time.

and yet this Country is in its 58th successful growth quarter.

Investing heavily into all services.

Tories and Republicans are heading for a fall, yet again, because the information you put out is totally flawed and innaccurate.

Doom.

Anonymous said...

Was going to comment on the rather one sided view of the American economy, but the other posters who have commented have made all the relevant points on this issue.
Don't listen to Cheney Iain, just switch on the American news channels.

Wrinkled Weasel said...

Very funny. Is this a Rory Bremner script?

Hope you enjoyed your trip by the way.

Anonymous said...

So the fiscal deficit is not growing as fast? So the rate at which the Chinese have to built annexes to their bank vaults is slowing? The rate at which the interest burden is increasing is slowing?
What about the Trade deficit, Cheney?
For how much longer will the Chinese and Russians hand over Finished Goods and Raw Materials to this psychopathic c**t in exchange for pieces of paper and morally uplifting lectures on the need for More Democracy?

Madasafish said...
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Anonymous said...

Just when I think you are sane Iain you come along with something like this!
What Bush & Cheney have done is to have had their cake, eaten it, whilst leaving the consequences for generations to come to sort out.
I would hazard a guess that the majority of Americans of the middle classes might differ with you on this.
As for the ones below them - have they really benefited from Bush's administration?
Tax cuts should only be a reward for fiscal prudence & stability.
Not as a bonus paid out of the public purse!

Anonymous said...

Iain Dale visits Washington and goes native within days. I think he tends to reflect the views of the last person you talked to, a blogged echo.

As the comments above show, the US economy is in a bit of a mess, after all Alan Greenspan says he thinks a recession could be here by the end of the year. US economic policy has been bad for a long time, illustrated by the way Bush placed his patsys as Treasury Secretarys; only the incumbent Hank Paulson seems to be capable. Under Clinton, Larry Summers had authority and influence.

James Higham said...

They ought to realize that no nation has ever taxed its way to prosperity.

Only too true.

Anonymous said...

I suspect that the UK economic record since 1997 will more than match that of the US since that date in spite of our higher taxes that pay for little things like a National Health Service (by the way I notice that you haven't been celebrating your proposed new local hospital at Pembury - to add the other new one in Farnborough and to replace the cesspits that your lot so noticeably failed to invest in for many years).

But when are you going to decide what you want - is it sharing the proceeds of growth or is it tax cuts? Or is the game not to annoy the floating voters by promising the former and delivering the latter?

The more I hear of Cameron and Osborne the more they they sound like Dubya before he was elected - social conservatism for the masses and dog whistles for the faithful - but we all know what happened in practice. Remember leopards (and Tory boys) never change their spots.

Madasafish said...

Taking economics lessons from Dick Cheney is like travelling to Zimbabwe to recevie lessons in democracy from Robert Mugabe.

No country ever grew long term running huge budget and currency deficits.. or have the Chinese been wrong for the past 25 years?

People who write political blogs should keep off economics if they know nowt about them.

Anonymous said...

Perhaps a few quotation marks would have helped to point up that apart from the first two sentences this is just a straightforward uncritical crib from Mr Cheney.

"President Bush is a man of principle and a man of his word" - that's priceless. Pure Rory Bremner as wrinkled weasel said.

Anonymous said...

Oh sorry for doubting your sanity Iain!
I just re-read your posting, and then realised the last bit was the punchline - "-- that President Bush is a man of principle and a man of his word."
Oh what a delightful little joke to brighten up this dull Monday!

Anonymous said...

Next time you go to the USA Iain, I hope you get seriously sick and don't have health insurance. That's when you'll see who the tax cuts have benefited.

Anonymous said...

"that begins with leaving more money in the hands of those who earn it."

or in Cheney's case, leaving more in the hands of obscenely-rich folk of the Enron variety who don't really earn anything but manage to stuff lots of other people's cash in their back pockets because of the way the market (sic) is structured to prevent genuine free enterprise in many sectors, and perpetuate the continuing and growing wealth of the 'class above'.

Anonymous said...

"President Bush is a man of principle and a man of his word. "

as seen when? - 9/11 when he sat ga-ga in front of those schoolkids? St Louis when the levee's broke?

Let's face it, this is a man who owes his position to 'hanging chads' and corrupt practices in electoral administration which make certain councillors in Burnley and Bradford and even Blair's private office seem squeaky-clean: a draft-dodger who thinks that ethanol will save the planet. Gone back on the bottle, George?

Anonymous said...

There is a powerful case for cutting taxes in the United Kingdom today. 43% of GDP is far too much in relation to government -provided services, and in comparison with other European countries.

What should be cut?

Accepting that belief in flat tax belongs with belief in flat earth, then indirect tax because of its very unprogressiveness. Even if VAT is considered a tax on all incomes at source it is still not progressive and should be cut.
While inheritance tax is a voluntary tax as only the poor pay it, a reduction of tax on inter vivos gifts would encourage wealth transfer greatly to the advantage of the young. If a wealth tax is desirable then a small annual charge would be a better way of levying a wealth tax. It should not be at the point of transfer.

Excise duties are insufferably high, many of them masquerading as 'green' or 'health and society' style goads; at these levels they encourage evasion and criminality.

Direct tax thresholds need raising, at the very least to compensate for 10 years of fiscal drag. And raised more than fiscal drag compensatory levels because subsistence levels are now defined higher than they were ten years ago.

Of course raising thresholds is a way of actually increasing progressivity.

Concerns about funding welfare services can be met by giving people a decent basic income (taxed progressively) which they can allocate as they need, not expensive producer-oriented services provided regardless of demand.

Global imbalances are not the UK's problem and are most certainly nothing to do with Gordon Brown. They are the Fed's to worry about and theirs to deal with.

Not for nothing was Rose Friedman a co-author of Free to Choose.

Anonymous said...

"Cheney's no economist "

except, as events over Iraq have shown, he's pretty economical with the truth!!!!

Anonymous said...

Cameron's said he's going to cut taxes for married couples. Another thrilling subisidy for the young from the young peoples' party.

And who is going to fund these cuts? Hard working, divorced singles like me who are still subsidising adult children trapped at home by their inablity to afford private sector rents or to buy their own homes - and who have as much chance of rising to the top of the council waiting list as of winning the lottery?

Cameron says, well so what if he's accused of too much focus on marriage - he doesn't care.

Well, we singles know that, Mr Cameron...

HM Stanley said...

The one-sided nature of the comments here is a signal of knee-jerk anti-Americanism so typical of most Europeans---and this a Tory blog!! The federal debt as a percentage of US GDP prior to 9/11 was 58%, rising to a present level of about 70%, all within the average range for the US for post WWII America. This is compared to about 50% for the UK. Yet the US is still a more mobile, resilient economy, building up its navy (and increasing military spending) instead of mothballing its ships like some country I know. So guys, let us have some perpective please!!!

Anonymous said...

Pointing out that Bush is far from being a man of principle and a man of his word is hardly knee-jerk anti-Americanism, given that millions of ordinary American citizens would agree.

But of course there's nothing like a good war to stimulate the economy,as we all know.

HM Stanley said...

Anonymous 2.44;

Obviously lots of other Americans [maybe even half], believe that he is trustworthy and a man of his word. That is why they re-elected him. However, the comments here were 100:0 the other way. That is what I meant by, if I may say so, mass, hysteric Anti-Americanism and a need for some perpective.

Anonymous said...

Whooeee!
Dare to make the case for lower taxes and doesn't that just turn the trolls out in droves!
Comments going from the condescending to the outraged and all the shades in between (not to mention the personal attacks on the blog author), most of which fuelled by the sad sorry fact that the US continues to grow and expand despite all the Socialist desires otherwise.
Let's REALLY piss 'em off, let's talk school and health vouchers!

Anonymous said...

I'm assuming you're quoting his speech there Iain, and that you haven't in fact been in Washington long enough to join the Bush administration!

I notice he spoke about the benefits of tax cuts without mentioning the collossal borrowing that have fuelled the USA's growth during the Bush presidency.

Perhaps you could mention the mind-boggling level of debt he's racked up too, just to make the neoCon-worshiping a little more balanced...?

Madasafish said...

Cheney said "You might also recall that back in 2004, President Bush set a goal of cutting the deficit in half by 2009. This
pledge was greeted with skepticism, to put it mildly. Yet we met that target in 2006, three years ahead of schedule. All told, federal tax receipts have gone up by more than $520 billion in the last two fiscal years"

Waht he meant was:"the deficit is annual additions to national debt. So all he's saying is that the national debt is not going up as fast as it had been. It's certainly not going down (as it did in between 1995 and 2001 — see graph). So in terms of the accumulated national debt, we haven't cut anything except its rate of increase (that's better, but the debt is still headed the wrong way).

Second, he's not talking about the annual gross (total) budget deficit, but only a part of it."

See http://zfacts.com/p/519.html


!

It's not only NULab what spins...

Madasafish said...

Cheney said "You might also recall that back in 2004, President Bush set a goal of cutting the deficit in half by 2009. This
pledge was greeted with skepticism, to put it mildly. Yet we met that target in 2006, three years ahead of schedule. All told, federal tax receipts have gone up by more than $520 billion in the last two fiscal years"

Waht he meant was:"the deficit is annual additions to national debt. So all he's saying is that the national debt is not going up as fast as it had been. It's certainly not going down (as it did in between 1995 and 2001 — see graph). So in terms of the accumulated national debt, we haven't cut anything except its rate of increase (that's better, but the debt is still headed the wrong way).

Second, he's not talking about the annual gross (total) budget deficit, but only a part of it."

See http://zfacts.com/p/519.html


!

It's not only NULab what spins...

Bob said...

"the recession we inherited"

utter bullshit

Anonymous said...

"What amuses me somewhat is that George Osborne and Dave will nio doubt be playing the 'stealth tax' card come election time.

and yet this Country is in its 58th successful growth quarter."

It would be growing even more if the government wasn't taxing us so much. What is it with the Left and wanting to spend peoples' money for them?

Madasafish said...

"What is it with the Left and wanting to spend peoples' money for them? "

Control freakery: we know better than you do how to spend your money.
If you spend it, you'll WASTE it on cars, houses, food, holidays.

While we will spend WISELY on the Dome, the Olympics, ID cards, immigration, a few wars...

(On that basis Michael Howard is a card carrying NuLab as was IDS.)

Anonymous said...

dr.doom wrote,
...and yet this Country is in its 58th successful growth quarter.

You are no doubt either ignoring, or forgetting, that the UK economy has been driven exactly the same way as the USA ever since New Labour took the reins. It is a fact (look at the Office of National Statistics as confirmation) that the UK has been in a seriously negative balance of payments situation for every successive month of this Labour government. When you read the figures, don't forget that you must ADD all the published figures for every month since 1997 and not assume that everything is balanced in the latest publication. The horror revealed when you do that will make you wonder why Brown has ever been regarded as "thrifty". In fact you'd be hard put to regard him anything other than an idiot!

Anonymous said...

Oh wow. I've been a liberal and a Democrat supporter all my life, but now I read the Vice President's words I see the error of my ways. I'll be a conservative and a Conservative and a Republican from now on, and I now see that we should all have guns and the rich should get richer and debt is good and nuclear power is safe and abortion is evil and Jesus loves me and Iraq has been a great success and we should invade Iran and North Korea now and President Bush is a very eloquent man.

Sorry, I've had a long day.

Anonymous said...

The world is happier to fund the UK twin deficits than the US twin deficits because of higher interest rates ,and the highly developed, highly liquid financial markets . Size, both relative and absolute matters too. There will have to be a correction at some point, but it's not the feared crisis facing the US.

Brown is a wholly incompetent economist but fortunately this sector of the UK economy is not his to control. Markets govern, technicians administer, and politicians appear on television (or in Gordon Brown's case, hide).

Anonymous said...

hatfield girl: Brown did, in fact, voluntarily give up control of interest rates, if I recall aright. So if you would credit interest rate policy with beneficial effects, it at least stems from his decision to reduce the political interference in the setting of rates (although he still, I believe, sets the inflation targets, the meeting of which drives the setting of interest rates).

Anonymous said...

Adam, 7.39. Yes, he let go of interest rates in 1997, but he is responsible for creating the fiscal imbalances that have driven up interest rates.

Wrinkled Weasel said...

This is how the US economizes:

(from FOX..so Verity can't accuse me of the usual crap)

“Soldiers get less than they deserve from a system seemingly designed and run to cut the costs associated with fighting this war,” Staff Sgt. John Daniel Shannon told the House Oversight and Government Reform Committee's national security panel. Shannon was injured by a gunshot wound to the head during a firefight with insurgents in Iraq in 2004.

“The really sad thing is that surviving veterans from every war we’ve every fought detail the same basic story. A story about neglect, lack of advocacy and frustration with military bureaucracy,” Shannon said.

He was commentating on the scandalous conditions at the Rat, Crap and Mildew Centre, otherwise known as the Walter Reed Army Medical Center.

This is how The US treats its "heroes".

Anonymous said...

It is Dick 'Halliburton' Cheney that is largely responsible for the fuck-up that is Iraq. They wanted it before Bush was even in the White House. I wouldn't trust this guy any more than I'd put my head inside a crocodile's mouth. He has made lots of money from his shares in corporations getting millions from the pain, death and destruction in Iraq.

http://www.informationclearinghouse.info/

If that is the sort of person who influences you Iain, you need to get some new friends. You lay down with a dog, you're going to get fleas.

http://www.informationclearinghouse.info/

Anonymous said...

"(or in Gordon Brown's case, hide)"

not only is he good at hiding himself, he's also good at hiding government debt.

Hello PFI?

Anonymous said...
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Anonymous said...

"I now see that we should all have guns"

Actually it's the right to be able to go out and buy a gun. A bit like you could in this country in the 19th century when there was vry little gun crime. Ah, but we mustn't shoot those poor burglars must we? Much better that we "understand" them.

"and the rich should get richer"

Yes, why not? The rich will always get richer unless you introduce full blown communism. Guess what - the poor get richer under capitalism as well!

"and debt is good"

That isn't a conservative position, unfortunately the clowns have adopted it though.

"and nuclear power is safe"

The French system is rather good isn't it?

"and abortion is evil"

It is if you believe unborn children are equivalent to living children.

"and Jesus loves me"

I doubt it.

"and Iraq has been a great success and we should invade Iran and North Korea now"

Many American Conservatives are isolationists.

"and President Bush is a very eloquent man."

Maybe not eloquent but he's more intelligent than people give him credit for. Unfortunately he hasn't shown much evidence of it recently.

Sabretache said...

Hatfield Girl: "Global imbalances are not the UK's problem"

Oh really? A bit like saying 'the risks of nuclear war are not the UK's problem' either.

Burgeoning global imbalances are EVERYONE'S problem - as we are soon to find out - the hard way. Ten years of the gospel of 'economic growth' and the cheap imported labour that is its sine-qua-non will then be seen for the social and economic disaster that, in reality it is.

neil craig said...

Cheney & Bush can certainly be accused of not taking their own advice - this does not stop it being good advice.

As advice it compares favourably with Cameron's commitment not to make serious tax cuts.

The example of genuinely cutting taxes, particularly business taxs & regulation is Ireland. Smaller, but now wealthier than the USA. While both we & the USA have achieved an average 2.5% growth, the world average is 5% & Ireland is managing 7%.

Letterman said...

'no nation has ever taxed its way to prosperity'

Franklin Delano Roosevelt anyone?