Not after the November 2008 elections. NOW.
It’s in a subscription-only editorial today that channels frequently-expressed BizzyBlog sentiments over the past several months, the Wall Street Journal decries the tax-crazed mindset of the current congressional majority, and says that we should instead be going in the opposite direction:
The politicians also have a role to play here, especially the newly dominant Democrats. New York’s Chuck Schumer wasted no time Friday calling the jobs report “a punch to the gut of our economy,” but his own party is preparing to deliver more blows. Any hint of a growth agenda has vanished since Democrats took Congress. Trade-expanding deals with Latin America and South Korea are stalled, and every week brings a new proposal to restrict trade with China.
On fiscal policy, Democrats have proposed or discussed raising taxes on cigarettes, oil and gas companies, hedge funds, private equity, capital gains, dividends, the U.S. subsidiaries of foreign companies, and individuals earning more than $500,000 a year (which includes millions of small businesses filing under Subchapter S). Add the promise of every Democratic Presidential candidate to repeal the Bush tax cuts if he or she wins in 2008, and no wonder investors are growing more cautious.
Six years into an expansion, and with the Fed having limited flexibility, Congress and the White House should if anything be talking about another tax cut.
I think that the only “talk” should be about how large the tax cuts should be.
As I pointed out Saturday, initial announcements during 2000 of net job losses that were over 25 times larger than August 2007′s net loss of 4,000 (two examples from 2000 — July, -108,000; August -105,000) were not met by Armageddon-like frothing. I don’t have to bother to look to know that Schumer was surely among those who were silent seven years ago.
Though there are some rumblings from Henry Paulson at Treasury about cutting the corporate income tax, there has to be political will in the administration to fight for across the board cuts for everyone. The Journal notes that this will appears to be lacking. You would think that the good federal budget news coming in the next 30 days or so would provide momentum for going on offense. It should.
With the federal budget within striking distance of a nominal breakeven level (but go here if you don’t think I understand the long-term problems), enshrining the current investment-related tax structure of low capital-gains and dividend taxes, accompanied by a 10% across-the-board cut in individual and corporate tax rates — 5% this year, retroactive to January 1, 2007, and another 5% next year — would largely eliminate any potential risk of an economic slowdown next year. If Chuck Schumer and his party’s presidential candidates really cared about keeping the economic expansion going, while at the same time increasing the money flow into his beloved federal treasury, they would be behind this.
UPDATE: Tax cuts and the 2008 presidential election came up on TIB Radio Saturday, but we didn’t go far enough. We agreed that the candidate who says he will cut taxes will have an inside track on winning the nomination. Actually, that’s not good enough. The GOP presidential contenders should be putting pressure on the president to cut taxes again — this year, retroactive to January 1. The candidate who does it first, consistently, and forcefully will have a distinct advantage over his rivals.