In an exclusive interview with the Heritage Foundation, Senate Minority Leader Mitch McConnell (R-Ky.) had strong words for President Obama:

From #OccupyWallSt:

On November 23rd, the Congressional Deficit Reduction Super-Committee will meet to decide on whether or not to keep Obama’s extension to the Bush tax-cuts – which only benefit the richest 1% of Americans in any kind of significant way. Luckily, a group of OWS’ers are embarking on a two-week march from Liberty Plaza to the Whitehouse to let the committee know what the 99% think about these cuts. Join the march to make sure these tax cuts for the richest 1% of Americans are allowed to die!

More information:

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While Obama tours the country promoting his personal donation plan, the Republican Presidential hopefuls are in a pitched battle for the nomination and arguing which tax simplification plan is best. Threatened with the possibility of rate cuts, the Media and politicians trot out the usual suspects of lies about tax hikes and tax cuts.  This is a battle Republicans must win and, to do so, they need to expose those lies.

Keep in mind that the battle between those who create wealth and those that want to redistribute it, mainly politicians, is as old as civilization itself.  We read of tax battles and even reform in every age, like Urukagina’s tax reductions in Babylonia/Sumer in 2350 BC.  Equally venerable are the constant set of demagogic lies by those against tax cuts and simplification.  It is important to note that politicians like complicated tax codes and high tax rates because they control those rates and dispense the loopholes and regulations that complicate the tax code.  Tax simplification means they lose power.  As a result, resistance to tax reform is more often the rule than reform. As for the lies, they abound, so let’s consider just a few:

Lie # 1: Tax cuts cause deficits/Tax hikes balance the budget.  The Media and the Left often say that the Reagan and Bush tax cuts led to deficits while Clinton’s tax hikes led to a balanced budget. In truth, according to the IRS, federal tax revenues rose dramatically after the overall Reagan tax cuts/reforms (98%) and the Bush tax cuts (a record $700+ billion). This is just as they did after the Harding/Coolidge cuts (61% revenue increase) and after the Kennedy/Johnson cuts (62% revenue increase).  Those are the four major income tax reductions we have had since the inception of the income tax in 1913 and every time revenues rose after they were in place – every time.

So did the tax rate cut cause a deficit? The lie, of course, is to blame the revenue gathering mechanism (tax code/rate cut) instead of the revenue spending mechanism, i.e. Congress/Presidents.  The spenders kept spending – often at an accelerated rate when they saw the new revenues.  Thus, the fault for continuing deficits lies not with tax rate cuts, which produced higher revenues, but with politicians who spent too much.

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Who would have really expected a 300-point stock market plunge on the day after President Obama’s so-called jobs speech?

Yes, worries over new fears of a Greek default ripped through the markets on Friday. As did fears of an al-Qaeda bombing plot on the tenth anniversary of 9/11. But you can’t help but think that at least some of the stock plunge is a signal of no economic confidence in Obama’s plan.

And for that matter, who really expected an unbelievably large $450 billion plan? That’s way more than 50 percent of the original $800 stimulus package in 2009 — which did not work.

Leaked reports leading up to the speech suggested a $300 billion plan — already way too big. But $450 billion? At a time of massive deficits and debt? And a downgrade? How is this going to be paid for? That’s what many folks want to know. Obama didn’t tell us.

In very round numbers, the package comes to $250 billion of temporary payroll tax cuts of one kind or another, with another $200 billion in new spending on infrastructure, unemployment benefits, and direct aid to state and local governments. But didn’t we learn from Obama Stimulus One that more government spending doesn’t grow the economy or reduce unemployment?

And while more than half of the president’s new package is called “tax cuts,” the reality is that these are temporary tax cuts. Even though tax rates are reduced for both employers and employees, it’s just for one year.

That blunts the true incentive impact of the tax cuts. Businesses like to look ahead at least three to five years for their employment planning. And they’re already worried about the tax and regulatory mandate costs of Obamacare, which has become a great deterrent to job creation. But nobody makes clear business decisions based on temporary one-year tax cuts. That’s not the way business works.

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As states around the country continue to face ongoing projected budget deficits, many elected officials are advocating consumption tax hikes in an effort to close budget holes (see Dayton, Mark and Democrats, Minnesota).  However, New Hampshire recently cut its cigarette tax in a move to increase revenue and now Michigan—the state generally regarded as having the worst economy in the country—may follow suit.

Senate Bill 517 would roll back the $2 per pack cigarette excise tax, among the highest in the nation, and reset it at $1 per pack.  It would be partnered with budget cuts including an option that would tighten up Medicaid restrictions, loosened by the previous Democratic administration.

As with New Hampshire, experts believe the move could enable Michigan to become more competitive vis a vis neighboring states with higher cigarette taxes, encouraging consumers to purchase their cigarettes within the state rather than elsewhere.  In addition, the move could reduce the attractiveness of smuggled cigarettes illegally sold without tax being levied.  Studies by the Mackinac Center for Public Policy have estimated that nearly 35 percent of all cigarettes consumed within the state were purchased outside its borders, in Indiana, Ohio and even Kentucky. The estimated tax-induced smuggling in Michigan, which increased steadily as the taxes on cigarettes also increased, was a hefty 16 percent, the fifth highest in the nation.

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When Ronald Reagan ran for President in 1980, it was said of him that he was not the “sharpest knife in the drawer.” The old joke went that in his role in the 1951 role in Bedtime for Bonzo, the chimp that played Bonzo was smarter than the presidential hopeful.

It’s true that President Reagan, for all his charm, may not have been a rocket scientist. However, what he did have – and what many politicians today lack – were defined morals, principles, and ethics. More importantly, he relied on those assets to guide him through many troubling times as President.

In 1981 when Reagan took office this country was in dire straits economically. Stagflation that resulted from Jimmy Carter’s pursuit of altruistic ideals had led to high unemployment, an energy crisis that culminated in gas lines, and awful prospects for future economic growth. Sound familiar?

Among Reagan’s actions as President that re-energized this country economically were tax cuts, deregulation, and interest rate hikes to kill inflation. All things considered, these policies worked phenomenally well, and the US entered a 20-year period of growth led by a manufacturing resurgence.

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Here’s a question: Why is repealing the Bush tax cuts such a constant obsession for the Democratic Party? Especially the top rates for the most successful earners and small business entrepreneurs?

It seems this is the Democratic answer for every single issue, every problem, every debate.

This, of course, saddens me enormously.

And so, always ready to help, I am recommending a 12-Step program to help them overcome their anger, resentment, and obsession over the Bush tax cuts. Democrats really need a Higher Power on this.

First, when tax rates were lowered across-the-board in mid-2003, the incentive effect kicked in to jump-start the economy immediately. Over the next four and a half years, before the financial meltdown slammed the economy– and that was a credit event, not a fiscal one—8.2 million jobs were created.

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Former Minnesota governor Tim Pawlenty turned out a blockbuster economic-growth plan this past week, including deep cuts in taxes, spending, and regulations. It’s really the first Reaganesque supply-side growth plan from any of the GOP presidential contenders. And he caps it all off with a defense of optimism as he charges ahead with a national economic growth goal of 5 percent.

That’s right: 5 percent.

Pawlenty calls this target aspirational. Okay, fine. But deeper down, he’s basically saying no to the declinists and pessimists who seem to populate the economic landscape these days. Big government doesn’t work. Let’s try something different.

Ronald Reagan always believed that America is exceptional. By removing obstacles to growth, the Gipper held that economic policies could unleash a massive outpouring of risk-taking, creativity, and entrepreneurship. He was right, and his policies launched a two-decade-long boom.

Actually, the first couple years of the Reagan recovery came in at over 7 percent. And as Pawlenty noted in his speech at the University of Chicago this week, between 1983 and 1987, the Reagan recovery grew at 4.9 percent annually. I note that Pres. John F. Kennedy also had a 5 percent growth target, a response to Ike’s three recessions.

So while those on the left criticize Pawlenty, and while even some conservatives scoff at his growth target, history says we’ve been there before.

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On today’s edition of Coffee and Markets, Brad Jackson and Francis Cianfrocca are joined by Dr. Arthur Laffer of the Texas Public Policy Foundation and the Laffer Center to discuss Paul Ryan’s budget plan, deficits, taxes the economy and more.

We’re brought to you as always by BigGovernment and Stephen Clouse and Associates. If you’d like to email us, you can do so at coffee[at]newledger.com. We hope you enjoy the show.

Related Links:

The 30-Cent Tax Premium
Dr. Arthur B. Laffer at the Texas Public Policy Foundation
Laffer Center: The Economic Burden Caused by Tax Code Complexity

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On today’s edition of Coffee and Markets, Brad Jackson and Ben Domenech are joined by Francis Cianfrocca to discuss the latest on inflation, and the consequences of Obama Economics.

We’re brought to you as always by BigGovernment and Stephen Clouse and Associates. If you’d like to email us, you can do so at coffee[at]newledger.com. We hope you enjoy the show.

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The “Internal Revenue Service” is such a bland name for an agency that stirs so much passion.

With Tax Day just around the corner, the time is right to figure out what the initials “IRS” really stand for.

WARNING: Immature Subject Matter. Viewer discretion is advised.

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Since the beginning of government, the ambition of those who spend money has rarely been matched by the ability of citizens to pay for government.  Modern day America, California or Greece are not exceptions to the rule, just examples of yesterday on a more grand scale today.  As perpetual as that problem is  - so too is the argument over the best way to raise tax revenue.  In simple terms, lower tax rates produce a more vibrant economy and higher revenues over time.  Higher tax rates do the exact opposite.  Heading into 2012, the Country cannot afford for Republicans to lose that economic argument.

The issue of taxes produces perhaps the greatest display between real politics and false economics.  Politicians throughout time have passed laws claiming to raise taxes.  In truth, politicians pass laws that raise tax rates.  That is a political process.  From there, the laws of economics take over.

In general, throughout all time, people adjust their behavior in reaction to political laws by acting in accordance with economic laws which are driven by human nature.  So if the penalty for speeding went up to $5000 per ticket – the number of people who speed would be reduced.  If the penalty for making income increases, i.e. taxes, rises – the amount of income actually made or reported will be reduced over time as well.

Today we are faced with astronomical deficits nationally and in many states.   The debt repayment obligation for California next year alone is larger than the budgets of 21 states.  What should governments do?  Should they politically raise tax rates? Or should they economically lower rates?  The answer is the latter and if Republicans (1) fail to make the argument why in 2011 and 2012, as this article implies they will, Grover Norquist, Tom Coburn duel over tax hikes , and (2) don’t stop simply saying NO to so-called tax increases, then Barack Obama will be reelected.

Consider this argument for cutting tax rates to raise revenue:

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“Stop the bad stuff” is what John Boehner told a bunch of us at breakfast a few weeks before the election. That’s how he defined the GOP mission. Now he’s Speaker.

And now there’s an opportunity for both ends of Pennsylvania Avenue to move in the direction of a supply-side economic growth model to reduce chronic unemployment and really get the economy moving again.

You can’t govern from the House alone. Boehner knows that. But he also knows that you can stop the redistribution, the big spending, the overregulation, the tax hikes, and the war against business and investors.

The economy is picking up this new political vibe. Economic growth has shifted to 4 percent from 2 percent (even though the Fed hardly acknowledges this). And just in the last six weeks, indicators of better jobs and business confidence have been springing up everywhere.

The economic upturn probably started late last summer, but it has picked up steam since the elections. Car sales, ISMs, small-business confidence, and brisk holiday retail sales — the indicators all look good.

And what’s helping light things up? Low-tax-rate clarity. Stopping the pork-barrel, earmarked, omnibus spending bill. And now the potential undermining of Obamacare. Plus, the hope for broad-based spending limits, and even a corporate tax cut touted by Obama and hopefully the new House Republicans. Trust but verify. And right now I’m willing to trust.

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Today Coffee and Markets is proud to be joined by Senator-elect Rand Paul of Kentucky.

The new year will bring with it a new House and Senate, one populated with several members whose approach to the job stands to be a unique departure from politics as usual. Foremost among these is Paul, the Kentucky eye doctor who won a contentious primary over a handpicked Republican candidate, and whose first elected political office will be that of United States Senator. How will being in the Senate effect Paul’s anti-establishment approach? What does he think of former rival Mitch McConnell’s leadership during a contentious the lame duck session? And what are his priorities for the next two years? We’ll hear the answers to those questions from Senator elect Paul today.

We’re brought to you as always by Stephen Clouse and Associates. You can find our iTunes feed at CoffeeandMarkets.com. If you’d like to email us, you can do so at coffee[at]newledger.com. We hope you enjoy the show.
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From the Associated Press:

One of the first places to test the new pro-business push will be Wisconsin, where Republican Gov.-elect Scott Walker has promised to call the new GOP-led Legislature into an emergency session on his first day in office Jan. 3.

Walker wants to lower taxes on businesses with fewer than 50 employees, impose new business-friendly limits on liability lawsuits and transform the state Commerce Department into a public-private partnership to lure companies to the state.

“I think it’s basically put-up-or-shut-up time,” Walker said after his November election. “We have a mandate from the voters of the state, and it’s one we don’t take lightly.”

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On today’s edition of Coffee and Markets, Brad Jackson and Ben Domenech are joined by Francis Cianfrocca to discuss the biggest stories from 2010 and some predictions for 2011.

We’re brought to you as always by BigGovernment and Stephen Clouse and Associates. If you’d like to email us, you can do so at coffee[at]newledger.com. We hope you enjoy the show.

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On a historic night this past Thursday, a new Tea Party Republican Congress completely transformed U.S. economic policy. Elections matter, and so do their ideas. Smaller government, low taxes, and less spending were key election themes in the Republican landslide. And those themes triumphed this week as a large tax-cut bill finally passed the House and a monstrosity of a spending bill was defeated in the Senate.

In one fell swoop, Obamanomics is out the window. Reaganomics 2.0 is now in the driver’s seat.

Perhaps the most amazing part of the story was the work of Mitch McConnell and John McCain (among others) to kill the 2,000-page, $1.2 trillion omnibus spending bill in the Senate, along with its 6,600 earmarks totaling $8 billion. This budget monster dripped with contempt for voters and taxpayers. But business as usual was overturned.

I had an inkling of this when Sen. McCain told me in a CNBC interview earlier that night that, if need be, he would favor a government shutdown over passage of the spending bill. And now, under a short-term continuing resolution, the whole current-services budget baseline can be lowered by anchoring it to 2008 spending.

Hundreds of billions of dollars can be saved, producing a smaller government that will be, in effect, a tax cut for the private economy. And the symbolism of overturning massive spending only two years after Obama’s debt-laden stimulus package is enormously important.

Of course, the tax deal is far from perfect. But low tax rates will be preserved for personal incomes, capital gains, dividends, and estates. This is pro-growth and pro-capital formation, and it’s a confidence builder, too.

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On today’s edition of Coffee and Markets, Brad Jackson and Ben Domenech are joined by Francis Cianfrocca to discuss what the dead $1.1 Trillion Omnibus spending bill means for small businesses, and what really started the financial crisis.

We’re brought to you as always by BigGovernment and Stephen Clouse and Associates. If you’d like to email us, you can do so at coffee[at]newledger.com. We hope you enjoy the show.

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Financial Crisis Primer: Questions and Answers on the Causes of the Financial Crisis
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Financial Crisis Primer

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Nothing changes so much as it stays the same. The Democrats continue to be relentless in their determination to expand all levels of government, and Republicans, despite just coming off an historic electoral victory nationwide, still don’t get it.

It would be impossible, under normal circumstances, to imagine that Democrats in Congress, having gone through what they have for the past two years, do not yet have their facts straight. They still are mired in the rhetoric of the past, and apparently are determined to remain there.

Following the Republican “deal” with President Obama on the expiring Bush tax cuts, socialist Senator Bernie Sanders (the only Democrat politician honest enough to identify his true political ideology) said:

Republican colleagues want huge tax breaks for the richest people in this country, but the reality is that the top one percent already — today — owns more wealth than the bottom 90 percent,” he said. “How much more do they want? When is enough enough? You want it all?

Just for the record, let’s put the facts on the table and burn them into the consciousness of every single Republican in Congress.

1. Nobody, but nobody is getting a tax cut by extending current law. We are simply maintaining the current tax structure. It gets us nothing and costs us nothing. Obama has referred to tax cuts, Republicans have referred to tax cuts, and Sanders, cited above, has referred to tax cuts, as have many other Democrats. How is it that Republicans so easily fall into the Democrats’ lexicon trap? Nobody is getting a tax cut by extending Bush-era tax law!
2. Those of us who pay taxes already pay way too much. The gaffe-prone Vice President, demanded that the “rich” be “patriotic…be part of the deal.” The top 1 percent of income earners pay about 40 percent of all income taxes. That is almost half of all income taxes collected in the US, Mr. Biden! Exactly how patriotic do they need to be?

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In early December, Congress passed the Child Nutrition Act of 2010 (The Healthy, Hunger-Free Kids Act); however, controversy still surrounds the bill regarding the cuts to the food stamp fund in order to pay for the act.

With a record number of Americans receiving food stamps as this WSJ report highlights, are those cuts to the fund such a good idea?  From the WSJ:

Some 42.9 million people collected food stamps last month, up 1.2% from the prior month and 16.2% higher than the same time a year ago, according to the U.S. Department of Agriculture.

Nationwide 14% of the population relied on food stamps as of September but in some states the percentage was much higher. In Washington, D.C., Mississippi and Tennessee – the states with the largest share of citizens receiving benefits – more than a fifth of the population in each was collecting food stamps.

With Obama signing the bill, it is noted that Democrats were not happy with the looting of the food stamp fund:

The major snag was over how to fund healthier school meals and related programs. The deal called for cuts in future food stamp benefits, which alarmed members of the Congressional Black Caucus. Rouse met with CBC members at a White House session to listen to their concerns, and President Obama dropped in for a quick visit. In the end, the White House pledged at some future time to deal with the food stamp issue.