Paul Krugman is a big Hillary Clinton supporter and in my opinion, he wrote a very silly piece in the NY Times this week. He thinks that Mrs. Clinton’s economic vision for the country and her “solutions” are best. I just had to scribble some thoughts. It is quite late so give me a break.
I disagree with his analysis. It sounds an awful lot like Mrs. Clinton and Mr. Obama want to eliminate free markets. In fact, I rarely hear them tout freedom; all of their speeches revolve around bold promises to spend more money that they do not have, increase requirements, force companies to follow their agenda, and raise taxes on producers. As typical politicians, they make assurances to people that they are going to spend more and get more accomplished. What do they have to show for their promises over the last 50 years? We have huge bureacracies and the same problems. The notion that taxing people at higher and higher rates is going to be good for the world is based on nothing. I read Krugman’s previous article about how higher taxes have helped Europe but he has been proved very wrong. Look at Ireland before their housing problems and look at Eastern Europe as they succeed with low taxes and less regulation.
Also, since when does a $75K annual income make one so rich that they need to have their taxes raised as argued by Mr. Obama? Why should they pay more in capital gains taxes when the wealthy are the producers, entrepreneurs and employers? Forget about the wealthy, around 100M Americans own stocks including most employees of large corporations and Union members; they hardly fit the “rich” who should pay “their fair share”.
Beyond that, the wealthiest 25% pay 86% of all income taxes in the country. We have one of the highest federal corporate taxes in the world and our state corporate taxes are higher than most countries; even in France and Germany in over half of the states in the Union.
In addition, the tax cuts for the rich argument holds no water. In 1980 the top income tax rate was 70% and the richest 1% paid over 19% of all income taxes. Today, with a tax rate at 35%, they pay twice as much as in 1980. The top 1% pays 39% of all income taxes today, UP 2% from 2000 when Bush took office. People earning under $35K per year do not pay any taxes on their income. The wealthy are not evil (as evidenced that progressives have higher net worth than conservatives by about 7%). In fact, they are most often the risk takers and entrepreneurs that we should be supporting and uplifting by reducing regulation and the burden of government intervention. Was that not the hub of McCain’s argument when he said “”I will not play election year politics with the housing crisis. I have always been committed to the principle that it is not the duty of government to bail out and reward those who act irresponsibly, whether they are big banks or small borrowers.”
In Krugman’s own book, The Tyranny of the Status Quo, he talks about the dangers and problems with big government bureaucracy. Yet he promotes two candidates that would like to increase bureaucracy and take away freedom; punishing those who take risks and grow opportunity and freedom. Where does Mrs. Clinton’s $30Billion mortgage restructuring come from? Where does government have the authority or right to freeze mortgage rates or impose moratoriums on loans? That is borderline unconstitutional is it not? If lenders (and mortgage financiers) know that the government can arbitrarily rewrite the terms of contracts, this would make it more difficult for homeowners to obtain mortgages, and would trigger a spike in interest rates on new loans.
The New Deal was a horrible failure and caused the Great Depression to last much longer than necessary. Read Amity Schlaes’ book Forgotten Man for a great analysis.
Mr. Krugman’s article is not even close to being fair or accurate about McCain. Mr. McCain still left the door wide open for some form of government intervention down the road. He said he was “prepared to examine new proposals” that were consistent with his principles.
On a conference call with reporters yesterday, McCain advisor Doug Holtz-Eakin echoed Obama, asserting that “certainly John McCain is interested in a 21st Century financial regulations system.”
Another advisor, former Hewlett-Packard CEO Carly Fiorina, emphasized that McCain still believed there was a role for government to help the “truly needy.”
One of the best arguments free marketers have to stave off a big government rescue plan is that the overwhelming majority of lower and middle income American homeowners behaved responsibly when they took out mortgages on their homes. It simply isn’t fair for them to be stuck with the bill for those who acted recklessly.
Free markets work. Mrs. Clinton and Mr. Obama have failed policies as evidenced throughout history. Low taxes and limited government is what creates a vibrant economy. As is a fed that does not overly meddle in markets. How can one argue that it is the role of government to get involved in voluntary transactions other than to enforce contracts? When people make stupid decisions, that is too bad and it is not “evil” to say so; nor is it careless or heartless as progressives argue against conservatives. It is a mature and thoughtful ideology.