The Three Great Tax Cuts - Boom, Bubble and Crash

[BR_Parkway]

The three worst economic disasters in American history follow the exact, same pattern. Tax cuts, boom, bubble, crash.
http://www.huffingtonpost.com/larry-beinhart/tax-cuts-theology-facts-t_b_144281.html

1. HOOVER
During World War One the top marginal tax rate went up to 73%. Not the highest ever, but pretty high.
In 1922, a series of rate cuts began. Down to 56%, 46%, and finally, in 1925, it went down to 25%.

The stock market took off. There was a boom. But the boom was a bubble.
It was followed by the Great Crash of 1929.
There were bank failures and the Great Depression.

2. REAGAN
From Franklin Roosevelt's second term all the way through to Jimmy Carter, - from 1936 until 1982 - the top rate was in the 70-92% range.
Then along came Reagan in 1981. In 1982 he cut that down to 50%.
The economy went into "the worst recession since the Great Depression."
His supporters argued that it was all Carter's fault and that the new policies would take time to work. The tax cuts stayed in place. In 1987, there was another round of tax cuts. They took the top rate down to 38.5%. It would stimulate the economy!
There was a boom. But it was a bubble.
Then, in October, 1987, there was a crash. The worst since '29. It was called Black Monday.
Much of the bubble money had gone into - ohmigod! -real estate.

Suddenly there were bank failures! More than during the Great Depression. There was a Savings & Loans crisis! There had to be a bailout.

3. BUSH II
George Bush came into office with the healthiest, post powerful economy in American history.
He immediately cut taxes. The top marginal rate went down from 39% to 35%. He also cut capital gains taxes and inheritance taxes. A recession immediately ensued. But he persisted.
Eventually, the economy began to grow.
Employment didn't grow very much. Median income went down. The stock market was pretty flat. But the financial sector - and only the sector - grew.

Which should have made it obvious to someone, that it was ... a bubble.
There was a crash.
Bank failures. A bailout.

Day after day, the masses are spun with the 'info' that tax cuts will solve all ills, lead to prosperity for all and basically make life living each day. But on our side of the aisle, we've always gone against this 'conventional wisdom' - we understand that tax cuts actually steal wealth from many and funnel it to the few. Obviously, those few have a vested interest in keeping the masses believing that they too will be the beneficiaries of this wealth, even though the history proves that not to be the case. Ever.

How do we reach through that brainwashing to some of the more reasonable? I love that this article simply puts it out there in black and white (something conservatives seem to understand way better than they do nuance). Even more so since the author points out the other obvious part of this:

HIGH TAXES CORRELATE WITH ECONOMIC GROWTH

The four period of greatest economic growth in American history, by pretty much any measure, are:
· World War II (1941-45): top tax rate varied from 88-94%

· Post-war under Truman and Eisenhower: top rate bounced around from 81-92%

· Clinton years: Clinton raised Bush's top rate of 31% to 37% and then to 39%

· First two Roosevelt Administrations (1933-40). When Roosevelt came into office, Hoover had already raised the tax rate in 1932 from 25% to 63%. Roosevelt raised it again in 1936 to 79%.

What I don't get is how so many are trained to simply deny reality so that they can hold on to their ideology. And how do we undo this "mythical lore" so that it stops impacting our elections?

[BR_Parkway]

1. It seems so basic, I don't know why some people pretend that it's

otherwise when it comes to picking what policies work.

[glitch]

2. They have to pretend, if they were honest no one would support them. nt

[whattheidonot]

3. oil and banks.

the oil companies and the banks have taken over. The government seems powerless. these giants do not to seem to care about the recession, which they help create. They have all the money. An economy does not seem to matter anymore. Without major government moves it is only going to get worse. I do not think Obama has the clout yet. A candidate is needed who gets elected without any support from oil or banks. that will be tough. Until it happens we are along for the bumpy ride. we have been had folks.

[BR_Parkway]

4. But with the seething anger, if they'd take on the banks and oil companies

with real regulations and all, they wouldn't need their support in the elections, the popular uprising would be more than enough - wish he'd get his FDR on soon

[whattheidonot]

5. too little too late.

Obama is in tough spot. He made bet to be in with oil. History may not be ready yet for the uprising. But because not enough benefits are coming from our present policies changes will come. They will have too. Oil is going to have to pay the bill for society or get out of the way. Everything about high oil prices and no taxation on oil leads to depression and worse. what is the use of it? it is what is happening now. free market imperialism is not working.