McCain vs. Obama on the Economy
by Ravi Batra
by Ravi Batra
Table 1: Increase in Family Income
Bill Clinton (1993-2000) $8,600
G W Bush (2001-2006) - $990
Why is job creation so strong under Bill Clinton and very poor under George Bush? After all, GDP growth under the two presidents is not that much different - 3.7% vs. $2.8%. So the economy expands under both presidents, yet Clinton created 23 million jobs while bush only 5 million. And with manufacturing, Clinton generated almost half a million jobs, whereas bush has actually destroyed over 3 million such jobs. What is the problem?
There are two reasons. First is outsourcing. Because of Bush's tax relief to corporations that ship jobs overseas, American multinational companies now mostly hire workers abroad; so American output still rises but few jobs are created at home. Thus, one reason for poor job creation under Bush is the vast growth in outsourcing.
The other reason is a huge rise in taxes on small business. The Republicans are right when they say raising taxes kills the economy and jobs, but they forget that they are the ones who raised such taxes. This perhaps comes as a shock to you. What! The Republicans raising tax rates, and that too on small business? Nobody would believe that. Aren't they the party of tax cuts? They are, indeed, but only for the wealthy. They have crippled the small business person with the largest tax rise that occurred on self employment under President Reagan.
As you can see, in 1981, when Reagan became president, the self-employment tax was only 9.3 percent and remained more or less the same until 1983. It jumped to 14 percent in 1984, and kept rising until 1990, when Bush senior was the president. So such a giant rise in the self employment tax occurred under the watch of Republicans. This information comes from the Social Security administration.
There is something else you should know. The tax increase was proposed by a commission headed by Alan Greenspan, John McCain voted for it in 1983, and Reagan signed it into law. All of them were prominent Republicans. How strong was this tax rise? It rose from a factor of 9 to 15 or by 66%. Can you even imagine a 66% tax rise? Such a vast tax increase has to kill the jobs machine that small businesses are.
Historically, I find that in general the Democrats create jobs, while the Republicans destroy them. President Hoover, who created the Great Depression, after all, was a Republican. Then how come the Republicans are known as a party of tax cuts? Yes, they indeed cut taxes for the rich, but they have raised taxes on the middle class ever since 1983. And now they are also the party of outsourcing that is further killing American employment.
John McCain wants to cut taxes for corporations and the rich again, but says nothing about the huge self-employment tax that he voted for. Obama wants to cut income taxes for the middle class while raising them on the wealthy.
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The Next Video:
Debt and Deficit: McCain, Clinton and Bush
By Ravi Batra
September 23, 2008
Debt and Deficit: McCain, Clinton and Bush
By Ravi Batra
September 23, 2008
Table 1: Poverty Rise under Various Presidents; 1980-2008
President ..............................Jump in Poverty Figures
Reagan...................................+3 million
Bush I......................................+ 6 million
Clinton......................................- 6 million
Bush II....................................+ 5 million
Source: The Economic Report of the President, 2008.
It is now well known that the federal deficit and debt have been getting out of hand over the last 30 years. It all started under President Reagan when he decided to slash the income tax drastically, while raising the tax rates on the middle class. The top-bracket tax rate fell from 70% in 1980 to 28% by the end of Reagan’s second term in 1988. At the same time the self-employment tax soared from a factor of 0.9 to 0.15. Thus the self- employed small businesses saw their tax rate jump by 66%--yes indeed 66%. That is why, you see, Reagan transferred the tax burden from the wealthy to the middle class, because I believe that small business persons belong to the middle-income group.
Incidentally, John McCain voted for the vast rise in the self-employment tax in 1983. This was his first major vote, and he used it to raise this middle-class tax by as much as 66%. I repeat this figure because I don’t understand how McCain did this and still claims that he has been a friend of small business people. If you don’t believe me, just look at federal archives for 1983.
What did Reagan's policy of tax-transformation do to the federal budget deficit and debt? Of course, they both soared. Reagan and his advisers had foreseen a sharp fall in the deficit, but Reagan's vice president, George H. W. Bush, who had earlier called such policy voodoo economics, knew better. His warnings came true. As the deficit soared, GDP growth fell below the historical norm, and poverty began to rise.
Then came Bill Clinton in 1993, and he raised the income tax rate to slash the deficit, which fell sharply, while GDP growth went up. So poverty figures began to fall under Clinton. The moral of the story is that when the income tax rate fell, the deficit and poverty rose, and when it went up, the deficit and poverty fell. History shows that high income tax rates are good for the economy, while high middle class taxes cripple small business and hence the economy.
No government can live without taxes, but the Democrats tax those who can afford to pay them, while the Republicans tax the poor and the middle class. I prefer the Democratic way, because it is not only fair, it is also good for the economy.
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These are just pieces from the articles. For the full transcripts, videos, and charts which graph (1) Federal Deficits Reagan, Clinton and Bush, (2) National Debt since WWII, and (3) Our Federal Debt Today, please go here: http://www.ravibatra.com/obamamccain.html
Peace,
Molly
"Ravi Batra was used to making tumultuous global forecasts and
having nobody listen – then predictions started to come true."
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