I did not say rates are the goal. I was correcting your mistatement of my initial post. I said there were tax cuts, you said there were not. Tax cuts means that the percentage of tax individuals pay is lowered. Bush proposed and Congress passed tax cuts at the beginning of his first term. That means money that would have been paid in taxes was not. We thereby lost a trillion dollars in revenue that we would have had, wiping out a budget surplus of approximately the same amount.
No, no, no. You were mistaken in confusing rates with revenue.
Of course there were tax cuts (actually a reversal of Clinton's tax increases) Where you are wrong is in claiming that they cost the government a trillion dollars. They did NOT. In fact they made the government money, from enhanced revenue resulting from economic growth.
An economy is a dynamicallly recursive system: what economists call
elastic. Raising or lowering taxes can and often does have the paradoxical effect of decreasing or increasing the money the government actually collects. It's a maximization curve, something any engineer will be familiar with.
Imagine Acme Co makes and sells widgets. Its goal naturally is to maximize its profits. Now, if Acme underprices its widgets they won't make as much money as they could. Conversely, if the widgets are overpriced than fewer people will buy them and again, Acme won't be as profitable as they ought to be. The idea is to strike the right balance between marginal profit and total volume so as to make the most money, and businesses do this every day of the year.
Tax policy works in a similar fashion: if taxes are too high, they act as a drag on the economy and the government actually collects less tax revenue than it would have had it left well enough alone. Similarly, if they are too low then the gov't makes less than it would otherwise. Unfortunately the Federal Government has been on the back side of the curve ever since World War II, and nobody, not Kennedy nor Reagan nor Bush, has succeeded in cutting Federal consumption to an ideal level of circa 20% of GDP- but of course would be more GDP to take 20% of, and so represents more government income than a higher percentage of a smaller economy.
So again: Bush's tax cuts paid for themselves by creating more than four trillion dollars in taxable economic activity. We would have a surplus yet if Washington didn't spend like a drunken sailor.
Incidentally, the biggest surplus recorded, FY 2000, was less than a quarter of a trillion ($237B).
I'm a radical Quaker pacifist.
