"Clinton-Gore Economic Miracle"?
Oh, you mean the recession that Clinton-Gore created.
Yeah, Dubya benefited by that because he turned it around within his first few months.
If Clinton hadn't emboldened the terrorists by NOT responding to terror attacks during his stay in office, 9/11 wouldn't have happened.
THAT is Clnton's legacy, teror attacks, oral sex, recession, and self-serving policies.
The Rubinian Candidate By STEVE FORBES August 16, 2004; Page A12
Democrat partisans and some Pollyannaish pundits and CEOs are positing that John Kerry would be just fine and dandy for the economy. Look at Bill Clinton, these folks chime; he gave us eight terrific years of bull markets and prosperity -- and he was a Democrat initially distrusted by most Wall Streeters and corporate types. One can understand the Democrats putting out such spin like this in an election year. But these other "what-me-worry-about-John Kerry?" types should stop inhaling illegal substances and start smelling the coffee: When it comes to taxes -- and a lot of other things -- the differences between George Bush and John Kerry are profound. In fact, this partisan openly postulates that the all-too-real possibility of a Kerry presidency is poleaxing the equity markets.
Take taxes. Sen. Kerry has openly stated his desire to eliminate the Bush tax cuts for "the rich." Unlike the original JFK, this JFK can't grasp that taxes are a price and a burden. The exactions we pay on our incomes are the price we pay for working. The levies we fork over for profits and capital gains are the price we pay for success and for taking risks that pan out. The idea behind tax cuts is very simple: Lower the burden on such good things as productive work, risk-taking and success, and you'll get more of them. Every time in American history that we've lowered tax rates on capital and labor, the economy has blossomed.
Kerry-ites are blind to the fact that the resulting prosperity always means more government revenue. Democrats like Sen. John Edwards remain emotionally stuck in 1932 (actually the two Americas today are parasitic trial lawyers and the rest of us). To these folks, hiking taxes on upper-income earners only means fewer baubles for the trophy wives of overpaid executives. The reality: People with high incomes are also predominantly business owners; tax cuts are precisely what helps them grow their businesses and create new jobs, not to mention starting new businesses altogether.
A report from the nonpartisan Tax Foundation makes this point clearly. The authors found that "(m)ost of the people in the top 1% of earners are business owners and entrepreneurs, not just high-income individuals with trivial business income on the side." In fact, business owners pay 55% of all income taxes. And how does Sen. Kerry propose to treat these small-business people who create most of our jobs and pay most of our income taxes? Kick them in the teeth with higher taxes.
Raise the capital gains levy? That will mean less risk taking, which in turn will mean fewer new businesses and jobs, and fewer innovations. It will also mean less money for retirement for millions of baby boomers. President Bush's May 2003 reduction in capital gains taxes by 25% is a key reason that stocks have appreciated by more than $2 trillion since then.
Reinstate the full tax on dividends -- and restore double or triple taxation? This will damage capital creation. Hundreds of companies have raised their dividends since that cut was enacted. Scores of companies have initiated these payouts, reversing a decades-old trend in the opposite direction. Microsoft certainly wouldn't have handed its shareholders a $32-billion special dividend under the old tax regime.
Sen. Kerry's proposed tax hike would also hurt corporate accountability and governance. Before 2003, companies had a perfect rationale for sitting on retained profits -- pay them out and most of those profits would go to the tax collector. Naturally, companies used the loot on new ventures that went beyond their managerial expertise. With the low dividend tax, a corporation must justify to its shareholders that it can use the money better than they can.
President Bush, in contrast, wants to make his cuts permanent. He has also proposed creating two new Roth IRA-like savings vehicles that would materially help hardworking Americans create real wealth over time. Alas, the Democrats are afflicted with the Curse of Robert Rubin. They think that Mr. Rubin persuaded Bill Clinton to boost taxes in 1993 and that, while the move was unpopular (it helped cost Democrats control of both houses of Congress for the first time in four decades), the tax hikes cut the deficit, which, in turn, reduced the "crowding out" of private investment by government borrowing, which, in turn, drove down interest rates. Result: a golden age of prosperity. The lesson: Raising taxes works! For Democrats, this is akin to a drunk hearing the news that more drinking means better health. Unfortunately for the country, Mr. Rubin's nostrums are nonsense. There is no correlation between budget deficits and interest rates. In fact, no sooner did Mr. Clinton sign that tax legislation than interest rates began a relentless climb. The 30-year Treasury bond went from 5.87% to more than 8% in a little over a year. The economy, which had begun a big recovery in the second half of 1992, hit the brakes. The economic growth rate for 1993 was less than it had been the previous year, when President Bush senior was running for re-election and Mr. Clinton was crying, "It's the economy, stupid." It was not until 1996 that the economy surpassed the growth rates it had achieved in the latter half of 1992.
The Curse also ignores the real factors that made the 1990s possible: the virtual elimination of inflation, which was the equivalent of a tax cut, particularly for capital gains; the 29% slash in the capital gains levy in 1997; the virtual elimination of capital gains taxes for most home sales (which triggered a housing boom that's still with us); the moratorium on Internet taxation; welfare reform (which Mr. Clinton twice vetoed and signed only when pollsters told him that his re-election chances would be hurt if he didn't); Nafta, which was a form of tax-cutting; and a new GOP-controlled Congress that would kibosh any more idiotic Clinton initiatives like national health care, and at least for a while, exercised real spending restraint. Being a bond man, Mr. Rubin himself has little understanding of entrepreneurial capitalism and the vital impact of tax incentives and disincentives. No matter. John Kerry and his fellow Democrats are in Robert Rubin's thrall -- tax increases are the economic elixir.
President Bush knows better. His own tax initiatives have helped us enormously; but if the president wants to positively stir the electoral pot, he should follow the advice of House Speaker Dennis Hastert, who recently suggested we junk the current tax code and replace it with either a national sales tax or a flat tax. In fact, on Aug. 11 the president himself seemed amenable to the idea. A national sales tax should probably not be enacted until we eliminate the 16th Amendment, which allows Washington to impose income taxes. Otherwise, we'll end up with both. The flat tax needs await no constitutional changes and it would do wonders. Under the plan I proposed several years ago, a family of four would pay no federal income tax on the first $36,000 of income and only 17% on any earnings above that. There would be no tax on interest, dividends or capital gains -- thus, no multiple taxation on the same income. The death tax would be buried once and for all: No taxation without respiration. The economy would then roar ahead -- and so would Washington's revenues.
Make no mistake; the contrasts between Messrs. Bush and Kerry are very, very real. If the Massachusetts senator wins, the U.S. and the world will pay the equivalent of hundreds of billions of dollars in lost economic growth and equity values because of the Curse of Robert Rubin. That would be an appallingly high tuition to re-educate John Kerry, if, indeed, he is re-educatable. And if the president does propose terminating the current tax code, well, then you can watch the Kerry-ites really squirm as they realize that an election they thought, with Dewey-esque confidence, was once theirs, slips out of their grasp.
Mr. Forbes is editor in chief of Forbes Magazine and president/CEO of Forbes Inc.