Andrea Tantaros

The problem with letting the Bush tax cuts expire

2010-07-22T00:00:00-04:00

Though few are talking about it, the most important political fight to hit Washington is on deck to occupy the next six months of debate: Whether or not to extend the Bush tax cuts, which are set to expire at the end of the year. While it doesn't sound sexy, the ramifications of the decision will be a crucial pivot point for the national economy.

Although the 2001 and 2003 tax cuts were passed with bipartisan support, you can expect class warfare this time around. Liberal Democrats will push to keep the cuts in place only for the middle class, while screaming that Republicans are eternally trying to favor the rich. On the other hand, fiscally conservative Democrats and most Republicans will point out that hiking taxes on the rich will wreak havoc on investment and employment projections. And they're right.

The problem with taxing the supposedly "rich" is that the vast majority of those in the top bracket are owners of small businesses. Because most file as individuals, they are subject to the individual tax rates. According to the Small Business Administration, small businesses represent 99.7% of all employer firms, employ more than half of all private-sector workers and generated 64% of the net new jobs from 1993 to 2008.

At a time when unemployment is a chief concern, dramatically increasing taxes on this segment of the economy would be the worst thing for our jobs outlook. Plus, taking new jobs off the table will hurt only the middle class, already hit hard by the dismal employment picture in the form of sluggish hiring and depressed wages.

Read more here

Obama: Spending so he can get the VAT

2010-04-09T11:43:24-04:00

The Obama Administration is creating a crisis so that they can solve it with a mechanism that will serve as the catalyst for future spending on their massive government programs. And even though our president said he wouldn’t raise taxes on 95% of Americans while he was on the campaign trail, get ready for the "VAT" -- a move that would raise taxes on everyone.

A new and ugly phrase has recently made its way into the vernacular in this country: the Value Added Tax or VAT tax. But don’t let the term fool you. The “values” that accompany this legislative fungus are perverse and only “valuable” to the spending obsessed, socialist liberals who support them.

A VAT is a sales tax imposed on every level of a product's path from production to consumption. It already exists in Europe and many other struggling countries around the world. It’s a sneaky sucker, too, since it’s essentially built in ahead of time and doesn’t show up on a receipt like a sales tax would. If a VAT were in place that iPad you just bought would be $600 instead of $500.

A VAT would pull in massive revenues. Just think: a 10% VAT would produce 1 trillion in revenues. Cash register sounds go off in the minds of every leftist that hears it.

Obama and the Democrats are spending SO much that they’ll be forced to invoke a VAT. They are creating a crisis so that they can solve it with a mechanism that will serve as the catalyst for future spending on their massive government programs. And even though our president said he wouldn’t raise taxes on 95% of Americans while he was on the campaign trail, this move would raise taxes on everyone.

Here’s how it’ll go down. This week, we heard former Fed Chairman Paul Volker float the VAT trial balloon just this week in a speech at the New York Historical Society, saying it was "not a toxic idea." Then, on Thursday, current Federal Reserve Chairman Ben Bernake mentioned it in a speech -- but only after he said we are on an unsustainable course with our record high deficits.

When questioned thus far about a possible VAT for America the White House has been quiet, only mildly denying that it’s an imminent option. But doesn’t mean it won’t be under consideration in a few months.

What Obama will say is that he is putting together a commission to find a way to pay down our country’s maxed out credit card.

Expect that commission to recommend the VAT tax after the 2010 midterm elections. By then, we’ll be on the verge of Greece-like catastrophe and we’ll have no choice but to impose a VAT. But only one that will, coincidentally, go into effect after the 2012 presidential election.

Worse yet – a VAT tax will create a lobbyist feeding frenzy just like the sales tax did.

Right now, special interests across the country – that’s everyone from insurers to car makers to potato growers to soda companies -- are wondering if they’ll be exempt from the tax or included. Believe me, they’ll spend millions to ensure they aren’t. It’ll be a special interest circus. Just watch.

The Obama administration was supposed to keep lobbyists away from government, not lure them in with their socialist revenue raising tricks.

Further, we are a nation of consumers. It’s what we do best. Unlike Germany and Japan who rely largely on exports to run their economies, 70% of our economy is fueled by consumer-based spending. It would be insanity to punish American consumers with a tax that’s bound to impair that beacon of growth.

This is a sobering moment. Literally and figuratively. Not only does it mark the end to every reason our ancestors left their countries to seek a better life in a free and prosperous society, the good folks in Washington will also be taxing our liquor even more leaving us with nothing to numb the pain.

The spoiled millennials are about to get served a big slice of humble pie

2009-12-17T09:29:00-04:00

Out of the Great Depression came "The Greatest Generation" - a fitting name for those most affected by the period because of their ability to weather the era and its wartime duty. Baby boomers, Generation X and Generation Y followed.

The next group, born between 1980 and 2001, is larger than the baby boomers - 92 million vs. 78 million.

They are the Millennial Generation, and they better hold on to something heavy.

The current recession - the most serious economic hole our country has faced since World War II - will test the millennials' mettle. They are, after all, a group that is overwhelmingly coddled, cocky and spoiled.

And they are about to be humbled.

Obama's Jobs Summit is a Feast of Folly

2009-12-03T13:12:00-04:00

Politicians constantly need to create the impression that they're actually getting paid to do something. President Obama is no different. Today, the White House will host a Jobs Summit featuring 100-plus business leaders, union chiefs, academics, mayors and representatives of nonprofit groups.

Obama's goal is to show he's serious about taking action on the backsliding economy and to convince the electorate that public activity means real policy action.

I'll have to crash Obama's party, because summits are giant publicity stunts where loads of taxpayer money is spent on fancy backdrops, flower arrangements and so much glad-handing and back-slapping that the participants leave with calluses and whiplash.

The timing is twofold, and painfully transparent: Hosting a high-profile gathering will allow the White House to portray an engaged Obama at a time when polls show the public believes his domestic agenda is in a hole. More importantly, the summit gives Obama a desperately needed distraction - especially during the holidays when the unemployed are acutely aware of their situation...

For more click here.

Remember the Panic of 1837?

2008-09-19T14:06:00-04:00

Do you remember the Panic of 1837? I sure don’t, but historians tell us it happened after a period of massive real estate speculation and poor financial regulation by the federal government. According to author John Steele Gordon:

"highly illiquid borrowers defaulted loans, a wave of bank failure swept the West and began to roll eastward. Bankruptcies in other sectors of the economy followed as liquidity vanished… Wall Street plunged… The American economy began to slide into deep depression."

Sound familiar? If so, it could help us to put things in perspective. As in 1837, we are dealing with an economy that engaged in massive real estate speculation. This speculation was followed by a liquidity crisis, bank failures, and stock market declines.

Nonetheless, these similarities do not necessarily mean that we are about to plunge into the Great Depression of ‘08, for there are a multitude of differences between today and yesteryear.

First, the depression following the Panic of 1837 was bad, perhaps worse than what we will see in the coming days, months and years. It brought the wheels of commerce to a screeching, hair-raising, break into a cold sweat, and buckle your seat belts stop. According to Gordon, 90% of our nation’s factories closed and federal revenues were cut in half. In contrast, our economy -- however bruised it may or may not be -- has yet to flat-line.

Second, there was no central bank in 1837 to alleviate the worst effects of the panic, it having been killed by one of the great opponents of centralized banking: President Andrew Jackson. Last, we are living in a much different technologically advanced post-industrial economy than in 1837.

I do not want to suggest an endorsement of the recent or past actions of our federal government; only in the coming years, will we truly understand the efficacy of the bailouts, non-bailouts, stimulus packages, interest rate adjustments, and novel credit facilities.

I also do not want to suggest that family, individual and governmental pocket books will not be impaired for some time to come. Or even suggest that a more dramatic correction might not occur.

I simply want everyone to realize that this nation has been through some pretty bad if not worse financial situations, and survived. In spite of years like 1837, wealth accumulated, and securities appreciated. Why? I would like to credit the resiliency of American economy coupled with indefatigable American optimism.

Most forget the Panic of 1837. I know I forgot about it. So forgotten is it, that Andrew Jackson, who probably fueled the crash with his visceral opposition to the Bank of the United States, now appears on the face of a paper note issued by the very sort of central bank that he opposed. A historical irony we should enjoy every time we whip out a 20 dollar bill.

So too will people in time forget the Summer of 2008 and those neglected historical ironies that will fill our future.