Treasury Secretary Geithner said today on meet the Press that congress absolutely would deal with tax rates before the election and that it would be the responsible thing to do if tax rates for the highest earners were raised. he also favored raising the capital gains rates. Lastly he said that it was important for the USA to show the world that it was able to act responsibly to address the huge federal deficit.
Why didn't they ask him about places where spending could be cut? That would also be a responsible way to address the deficit. Indeed, since spending has climbed at an astounding rate since Obama (and Geithner) took office, it would seem that reduced spending levels are the most fruitful place to look for savings. Since the
Democrats narrative, however, is that tax cuts only help the wealthy, they believe that they need to undo them no matter what havoc it causes. "Believe" is the operative word in that sentence. Nearly every economist who is not just ideologically driven will tell you that raising taxes -- especially capital gains rates -- will slow economic growth. Obviously, this makes sense. Raising capital gains rates by about 50%, will make the potential benefits from an investment less lucrative. That means a higher expected return is necessary in order to justify an investment. From that it follows that fewer investments will meet the necessary profit criteria. So there will be less investment. Less investment means less growth, fewer jobs, lower tax revenues, and -- in Geithner's world -- a need to raise taxes further so that we can show that we are responsible.
Why can't Geithner go on a news show where someone actually asks him about this. Are the reporters just too uneducated to come up with this. It is not rocket science, just basic economics. Or are the reporters so in the can for the obamacrats that we hae no hope of ever seeing an intelligent discussion of this issue?
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