Saturday, October 28, 2006

Taxes and GDP

George W. Bush feels the Republicans can gain ground if they claim Democrats want to increase taxes. Democrats refuse to confront the issue of Taxation directly, saying basically they would let the Tax Cuts run out according to schedule. Democrats are allowing the Republicans to set the agenda on Taxes, and in a manner in which they can be defeated.

The Democrats need to challenge the Republicans to show that the current record of Federal expenditures without sufficient Taxation is viable economy policy. Democrats should set up a publicized Table showing how the National Debt will mount under current expectations of Federal Spending levels and estimated Tax revenues. The Table should include a column showing the increased liability per Taxpayer each Year, and a column expressing the added Tax liability in Dollar terms for each Taxpayer to replace the expected Debt with zeroing the Budget: where Expenditures equaled revenues. A second Table should relate how this Tax increase is spread across Income levels, under the current level of progressivity of Tax placement.

William Polley has written an excellent article, GDP disappoints, on the possibility of Growth or Recessive conditions. It should be read carefully. His doubt of a Growth reading less than 0.5% for Q4 surprises me, though. Examination of the basics leads me to think that Civilian and Military Aircraft contracts will decline drastically in Q4, Auto Sales will stay relatively static, and the Housing market will go even lower. This puts pressure on Christmas Sales to make up the difference, with a market increase over last Year’s Christmas Sales to even break even. I don’t think it will happen. lgl

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