LiarGate and How it Relates to Tax Policy

With LiarGate in the media under various titles, such as McCain gets grilled on ‘The View’, Campaign of lies disgraces McCain, and Will McCain-Palin Lies Hurt Them?, it’s obvious what a dishonorable fraud that has been perpetrated upon the once respectable Republican Party—and the insult that party delivered to American conservatives and independents.

In the last month, McCain has become the biggest liar in the modern history of presidential politics. He makes Bill Clinton look like George Washington.

-Andrew Sullivan, Conservative Columnist, The Atlantic

The McCain Policy of Lying is merely the “Buffer Zone” designed to distract public discourse from the Foundation of Lies upon which their other policies rest. Today, I’ll address the McCain Tax Policy Lie:

The economic disasters of the Reagan/Bush Sr. years were repeated with religious zeal and new levels of reckless abandon by Bush Jr.—predicated on what was literally “cocktail napkin economics”, or the “Laffer Curve”, that was woefully misunderstood by those having dinner with Arthur Laffer (then a professor at the University of Chicago) in December 1974 at the Two Continents Restaurant in Washington, D.C. And who were those present? None other than Donald Rumsfeld (then Chief of Staff to President Gerald Ford), Dick Cheney (then Rumsfeld’s deputy), and Jude Wanniski. According to Wanniski and Laffer:

While discussing President Ford’s “WIN” (Whip Inflation Now) proposal for tax increases, I supposedly grabbed my napkin and a pen and sketched a curve on the napkin illustrating the trade-off between tax rates and tax revenues. Wanniski named the trade-off “The Laffer Curve.”

What was misunderstood—a lie that Cheney, Bush, McCain and the Neocon Blok maintain to this day—is that the Laffer Curve is merely a generalization, and that the tuning of it is extremely sensitive to economic policy details, tax policy details, spending, and deficits. Rather than merely misunderstanding the economic details, these neocons likely are simply using the theory to justify raping America and American citizens, from janitor to doctor, of their hard-earned income. They’re not stupid. They are neocons. They are LIARS.

According to Jeff Frankels, Harpel Professor of Capital Formation and Growth, Harvard University’s Kennedy School of Government, Director of the Program in International Finance and Macroeconomics at the National Bureau of Economic Research, and former Member of the Council of Economic Advisors:

The Laffer Proposition, while theoretically possible under certain conditions, does not apply to US income tax rates: a cut in those rates reduces revenue, precisely as common sense would indicate. As detailed in a new paper of mine Snake-Oil Tax Cuts, for the Economic Policy Institute, this conclusion was the outcome of the two big experiments of recent decades: the Reagan tax cuts of 1981-83 and the Bush tax cuts of 2001-03. It is also the conclusion of more systematic scholarly studies based on more extensive data. Finally, it is the view of almost all professional economists, including the illustrious economic advisers to Presidents Reagan and Bush, even though it contradicted the views of their employers.

In actual practice, real results do not track with the theoretical “ideal” Laffer Curve. Here, for example, are data plotted from actual corporate tax rates and revenues in various countries from 2004:

Neo-Laffer Curve Example

Unfortunately, however, neocon politicians tend to attach very strongly to the fantasy world they conjure-up in their own minds. To this day, they still insist that national and world economics are simplistic and ideal, despite all the evidence to the contrary.

Lies appear to be their world view. Their Doctrine.

According to Bloomberg today, Former Federal Reserve Chairman Alan Greenspan said the U.S. can’t afford John McCain’s tax proposal—a proposal based on the idealistic version of the Laffer Curve—without similar reductions in the federal budget.

I’m not in favor of financing tax cuts with borrowed money.

-Alan Greenspan, lifelong Republican and longtime friend of McCain

Greenspan said the widening income disparity among Americans is a “very serious” issue that requires both raising the pay of lower-income workers and reducing higher incomes.

Please, everyone: Know what is truly good for you. Based on fact, not lies. And know what is good for our country. Demand with your vote to awaken our country once again, to live loud and proud as that uniquely American nation of “Pesonal and mutual responsibility” that Barack Obama spoke of at the conclusion of the 2008 Democratic National Convention.

Here’s a start: Some substance in defiance of the McCain/Palin Lies. This chart is from the Washington Post, published June 9, 2008. The same data was also charted by CNN/Money on June 11th:

Tax Policy Comparison Chart

Naturally, this chart by necessity is a generalization—everyone’s specific tax situation will be different—but these serve as the best available ball park figures. While what McCain is proposing will tend to increase the income disparity in the US, Obama’s proposal may serve to reduce it somewhat.

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One Response to “LiarGate and How it Relates to Tax Policy”

  1. demo kid Says:

    The fascinating part about the Laffer Curve discussion is that Republicans can use it with a straight face when it is used in such a dishonest way. Yet another example of how they’re just a bunch of lying bastards.

    By all accounts, a dynamic economic system should mean that the point of maximum revenues will change with macroeconomic conditions. If Republicans were true adherents to this philosophy, they should be just as willing to RAISE taxes if the tax rate were to LOWER them, if the objective was to maximize revenue at any given point in time.

    Of course, does this ever enter into a discussion about the Laffer Curve? Absolutely NOT.

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