Some taxes up, and the sky’s still there

“Most of the media is so sold out to Obama that they’re missing the obvious,” Jim DeMint said on Fox News only last week. “The policies the president has in place, especially the tax increases that just got in, are going to hurt our economy, probably actually bring it down.” The former Republican senator from South Carolina was speaking as president-elect of the Heritage Foundation, a conservative think tank.

DeMint made this remarkably dire prediction seven days before the Dow Jones Industrial Average hit an all-time high. The employment numbers remain weak, but they, too, are improving and helping raise confidence levels, especially in the housing market.

By the time you read this, stocks may have gone higher or lower. And a raft of additional good and bad economic news will have marched across the Bloomberg screens. But we can count on one constant: Jim DeMint will be wronger than Captain Peter Wrongway Peachfuzz.

His lightning bolts did provide some stereophonic balance to President Obama’s over-the-top warnings of grievous suffering should the sequester go into effect, a process that also began last week. Then, from the speaker on the right, came the not very relevant point that the tax hikes would take more money out of the economy than the forced spending reductions. “It’s a whopping $149 billion in taxes vs. $85 billion in spending,” complained Heritage spokesman Robert Bluey.

One wishes the bumper sticker could be widened to include these thoughts: For starters, the higher taxes plus the sequester equal significant deficit reduction, something conservatives purport to want. Also, combining new tax revenues with spending cuts would seem a balanced approach.

One can’t repeat often enough that the stock market and economy took off after Bill Clinton’s 1993 tax hike on upper incomes. Ignoring that evidence, the right persists in replaying the old videotape that higher taxes inevitably lead to economic desolation.

“Higher taxes will hinder economic growth,” Heritage said back in 1993. They “will shrink the tax base and reduce tax revenues.” They will “result in larger federal budget deficits.” Newt Gingrich, off by about 180 degrees, confidently predicted that the tax increase “will in fact kill the current recovery and put us back in a recession.” As we know, the opposite happened.

Certainly, other things helped create Clinton-era budget surpluses. The dot-com boom raised stock-market wealth, and defense spending went down. But the bottom line remains: By the end of Clinton’s eight years, there were 23 million new jobs and average weekly wages were up 21 percent.

And here’s the kicker: The booming economy made the richest Americans even richer. They did better after paying Clinton’s higher taxes than they did in the George W. Bush era, when their tax rates were lower.

As noted, many other factors add to or subtract from the economy’s health. Right now, the Federal Reserve’s low interest rates are helping boost investment. Housing seems to be perking up. And the American economy was bound to eventually recover from the depths.

It’s obvious, though, that Obama’s tax increases, including a few fees on health care, are not blowing up the economy. It’s amazing that guys like DeMint can go on Fox year after year and make the same crashingly silly predictions — and that Heritage hasn’t stopped him. (The Washington Post last December predicted that DeMint, a tea party hero, would give Heritage a “sharper edge.” I don’t think “sharp” is quite the word.)

As for the allegedly falling sky, all you have to do is look up. Some taxes have increased, and the sky’s still there. Not only that, it’s getting bluer.

Froma Harrop is a Providence Journal columnist. Her email address is fharrop@projo.com

More in Opinion

Editorial cartoons for Tuesday, Sept. 26

A sketchy look at the day in politics.… Continue reading

Players’ protest honors rights our flag represents

Editorial: More than a few veterans view the protests as honoring one of the things they fought for.

Saunders: Trump’s success may hinge on GOP battle in Alabama

Unless Sen. Luther Strange retains the nomination, Democrats may have a shot at the seat.

Robinson: Trump’s race-baiting rhetoric shows who he truly is

We also have a president who, if he’s not a white supremacist, does a convincing impression of one.

Harrop: A financial disaster would swamp many of us

Some 46 percent of Americans say they could not scratch up $400 in ready cash to meet an emergency.

NFL players’ protest shows disrespect for veterans

Tonight the brave, valiant and courageous Seahawks shunned the American flag. Tonight… Continue reading

Everett mayoral race: Success of Schack shows Tuohy’s skill

Thanks to Judy Tuohy and her staff, Schack-tober Fest returned to Everett,… Continue reading

Sultan fire district board: Geiger knows needs of firefighting

As a business owner, Sultan Fire District 5 resident and personal friend… Continue reading

Daydream is over; GOP must work with Democrats on ACA fix

Editorial: The Senate should end its latest ACA repeal effort and continue bipartisan talks.

Most Read