This Reagan Republican's Recipe for Economic Recovery

I believe that Ronald Reagan, more than any other political leader in recent history grasped the power of Capitalism; especially when harnessed to the the can do attitude of the American People and the constitutional freedoms our founders secured for us. It is with unmovable belief in those three ingredients that Ronald Reagan knew this Great Country could overcome anything. Personally, I believe he was right on.

When Ronald Reagan took office in 1980 he was faced with extraordinarily high interest rates driven by equally high inflation. In President Reagan's Words there were "Too Many Dollars Chasing Too Few Goods". His cure for this was to institute a Supply Side Economic plan by cutting tax rates on business and individuals as an incentive for business to produce more goods. Many criticized this as "Trickle Down" economics; just another way for Republicans to provide perks for the wealthy. I don't think that anyone in their right mind today can argue with President Reagan's results.

Today we find ourselves in yet another economic rut brought on in large part by the pinheads running the federal government. Unlike 1980, there are goods to be had, but no money to buy them. I guess you could say that we have too many goods chasing too few dollars. What to do? One thing is for sure, the efforts of the liberal progressive democrats in charge today illustrate exactly what does not work, and that is socialism. Now we know what socialism looks like; up close and personal.

Back to the point at hand; how do we get out of this mess? Inflation and interest rates are extraordinarily low rather than extraordinarily high. So, what to do? In 1980 producers did not produce because demand was stifled by high costs and interest rates so high no one could get a loan to make a purchase or finance improvements. Today, producers are not producing, and therefore not hiring because demand is stifled due to the fact consumers don't have the money or confidence to purchase anything other than necessities, and guess what, no one can get a loan! The dynamics may be different in the two time periods, but the results are the same. An economy with no growth, or any expectation of growth.

So, what is the answer? If you are a believer in Reaganomics, the answer is clear; CUT TAXES! No doubt reducing tax rates worked for Ronald Reagan, and it would work again for the very same reasons. When the government allows tax payers to keep more of their money, they spend it. When they spend it they create demand, when demand is created, businesses find a way to meet that demand through expansion and the hiring of workers necessary to manage increased production. In this environment, producers create new products and generate product line extensions to capture dollars that consumers are willing to spend because they have more money to spend and are confident they won't be laid off or see a reduction in current income flow! This is an environment that the government simply can not create through spending your tax dollars and mine on stupid stimulus packages. Only the private sector can create economic growth and prosperity.

However; I believe that cutting taxes alone is not the answer. Such an action is akin to treating a symptom of a problem rather than the problem itself. A stance I believe our conservative leadership should assume. We need a cure, a cure that will keep us from getting to the same place again in twenty years. While cutting taxes is a great idea, it is short term because it does not remove the real culprit; Politicians with the power to tax or not to tax, to increase taxes, or not increase taxes, or just spend tax dollars they don't have.

Consider the Bush Tax Cuts for a moment. They are set to expire in a short period of time and now it is up to politicians to determine what will happen. They use the Bush tax cut expiration, indeed any tax or non tax event as a way to wield power over every tax paying American. It's time for it to stop!

Now, how could congress take action that would have the same impact as cutting taxes while at the same time reposition the economy of the United States as the most powerful in the world? What steps could congress take to restore a powerful manufacturing base in the United States? What steps could congress take to make the United States the most tax friendly place for individuals and corporations to do business? What steps could congress take to dramatically reduce unemployment? What steps could congress take to pull Social Security and Medi-Care out of the financial ditch? What steps could congress take that would put a fire wall between what's best for all Americans and special interest lobbies?

ANNOUNCE INSTITUTION OF THE FAIR TAX! Yes, that's right, implement the Fair Tax. The Fair Tax would have a greater positive impact on our economy than any so called tax cut could ever have on our economy through replacing current tax revenue with a national sales tax. Think about this; with implementation of the Fair Tax, individuals no longer pay federal income, social security, capital gains, or inheritance taxes. Corporations no longer pay federal or payroll taxes. Tax revenue currently collected through confiscation would be replaced with a 23% sales tax on all purchases of new goods and services. Bottom line is that a new pair of slacks that retail for $100.00 today would still retail for about the same $100.00 after the Fair Tax because approximately 23% of that $100.00 retail is a culmination of taxes paid the get those slacks to retail.

Think about this, an individual that Grosses $50,000 today probably pays 20% or around $10,000 in federal taxes, with the fair tax that individual would bring home 100% of their pay; a 25% increase in take home pay, so for all you Fair Tax dissers out their that say the Fair Tax amounts to a 30% tax, well consider this; reveive a 20% reduction in taxes and get a 25% increase in pay. If you would like to learn more about how the Fair Tax actually works, please review my many blogs on the subject, or go to the Fair Tax Website to learn more.

So how does the Fair Tax restore manufacturing, our economy, jobs, and Social Security? Pretty easy, when every individual that earns a living has more money to spend, they do, when manufacturers find the most tax friendly place to do business; they set up shop there, when corporations need to hire people to scale up to meet demand; they do. Social Security, Medi-Care? Well, when Nancy Pelosi or her her husband buys a new Mercedes, they pay 23% sales tax, when Bill Gates, or Warren Buffet and the like that live on accumulated wealth and pay virtually no tax on income, pay taxes every time they make a purchase. People in our country on vacation; they pay taxes on every purchase they make. People here illegally; ditto. Individuals that earn what would currently be unreported income pay taxes on every purchase they make. If you still don't think that the Fair Tax would restore our economy, I don't know what else to tell you. Oh yeah, the really big deal here; its the fact that with the implementation of the Fair Tax, there is no need for the IRS, it goes away along with politicians ability to manipulate the tax code to maintain power over you and I.

Now along with passage of the Fair Tax, conservatives must repeal Obamacare and let open competition go to work to reduce the cost of health insurance, and then remove itself from ownership of any corporation such as GM, Chrysler, Fannie, or Freddie.

Is this a cure all? No, but it is one heck of a great start! Just do what Ronald Reagan did. Believe that when the American People are given the tools to work with; namely by getting government out of the way; the sky is the limit.