Posted on 02/16/2009 9:04:09 PM PST by WheresMyBailout
I was doing some introspection on the Bush (II) Presidency. Personally, I believe that he should be regarded as a top President for being only one of two Presidents to have created a foreign democracy (the other President was Harry Truman - my favorite socialist, I mean Democrat).
However, I believe George Bush also created a fiscal nightmare by both increasing war spending and domestic spending at the same time while cutting taxes.
Of course, a bit of calculus will show that cutting taxes can increase revenue at certain rates. And raising taxes always creates a deadweight loss, discouraging activity which is taxed.
At the same time, funding a war through debt yields not only principal repayment, but also interest charges that have to paid through taxes in the future.
My personal belief is that our high debt led the Fed to raise interest rates, which then led to the economic meltdown we are experiencing today.
My question to you how should we handle the fiscal issues relating to war funding in the future. Pretend you are the President (even if you're not a natural born citizen above 35) and you have a favorable Congress.
You have all options on the table including, but not limited to: not going to war, instituting a draft, increasing or decreasing military pay, increasing or decreasing funding for the war per year (noting how this may affect military success), increasing or decreasing domestic spending, increasing or decreasing taxes, increasing or decreasing the debt, and/or appointing a Fed chief that will pursue an easy or tight monetary policy.
But those purple Iraqi fingers are in pictures everywhere, and that is is real legacy, IMHO.
The tax cuts increased government revenue, and therefore are not related to this problem. The spending, on the other hand, was a big problem. The war spending not so much...we didn’t start the war, and had to do it. The domestic spending was a terrible mistake.
Everyone knows the way to increase government revenue is to LOWER taxes. That President GW Bush is the only president in history to Lower Taxes in Time of War is a measure of his Greatness. He may be the only ruler in the history of nations to lower taxes in time of war. That makes him even Greater.
I don’t think I would ever raise taxes— even in war time.
Tax cuts increase revenue to the government. What rationale could there be for raising taxes?
Little is made of how Bush utilized an all volunteer army to win. If Bush is so pathetic at persuasion, how was he able to do this huge war effort with volunteers. LBJ, Truman, and FDR all had compulsory service.
Record numbers of people volunteered to fight the WOT and yet this is casually dismissed by everyone.
Why would we draft people?
We have a just war?
The scale of the US economy makes war against the US just plain stupid.
This is the American century and its all over except for the shouting.
Wasn’t the original method in funding war via special taxes? I believe that is how the Income Tax came into being in the first place, was to fund the Civil War for the Union.
Spending 4% of GDP to keep us safe from foreign threats is money well spent.
No. We should cut taxes to fund anything.
We are at the point on the Laffer Curve where tax cuts increase revenue to the treasury.
Only fools believe, and vote-hungry libs sell, tax increases as revenue increasers.
It used to be, if you won the war, you got the plunder. I see a lot of wisdom in bringing that idea back into practice. Screw nation building.
True that.
Yeah, and Lincoln was a Marxist, who wanted to nationalize the banks. Lower the taxes if you want more spending cash.
My answer to my own question is I would not increase taxes. The deadweight loss would probably decrease overall tax revenue and it would unnecessarily impact the overall economy.
This leaves us with the neccessary evil of funding the war through debt. I would deliberately cut domestic non-military spending to try to balance the budget as much as possible, and hopefully I would cut as much from domestic spending as is needed to fund the war.
Bush’s biggest mistake was that he increased domestic spending during wartime.
Increasing taxes makes no sense when we’re already on the wrong side of the Laffer curve.
I’d be in favor of a permanently balanced budget with the option of selling war bonds (ideally to US citizens) when the SHTF.
Why fight for freedom when we give ours away willingly?
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