I’ve been encountering a great deal of ignorance lately on the matter of economics. It certainly can be complicated. And while I’m no Adam Smith, I would like to think I have something of a grasp on the subject. So lets sort through a few myths and truths, shall we?
“Uncle Andy! Tax cuts cause deficits! Look at all the spending George Bush did! Look at the deficit! His tax cuts caused that!”
That is not true at all. That line of illogic is a myth. Tax cuts do not and cannot cause deficits. Only spending does that.
Austerity measures do not create deficits. Only overspending does that. You know why Greece is in trouble, along with Spain and Italy and Ireland soon to follow? Because their debt to GDP ratio is hovering at about 120%. In other words, the amount of money Greece owes is 120% more than its gross domestic product for an entire year. The US is currently sitting at a little over 100% debt to GDP. The reason Greece can’t borrow any more is that its costs for doing so are getting too high – just like a deadbeat who maxes out his credit cards, and is seeking to borrow more. The bank will charge him more interest. At some point, the bank will refuse to loan him any more money at all. America is Greece within a decade if we continue on this path.
Austerity is painful. I would liken it to the hangover after a night of too much partying. Hangovers and austerity are painful. It leads to privation. Government workers lose jobs. People lose services and benefits. People get hurt. Austerity stinks.
In some cases though, it is the responsible, adult, proper, needed thing to do. Its time the West takes it medicine and deals with the hangover it created for itself by too many decades of unsustainable promises and entitlements. There simply is not enough money to go around to fulfill the empty promises made to far too many people over the years.
The true liars in the debate are the Keynesians who oppose austerity. Keynesians are adherents to famed early 20th century economist John Maynard Keynes. Leading proponents of this illogic can be found all over the world of economics today, in people like Robert “Third” Reich, and Obergrueppenfuehrer Paul Krugman. Its bad company to be in, I assure you.
The Keynesians will tell you that what we need is even more red ink, more stimulus, more big spending by the central government, more inflation, more printing money, and higher deficits. This is insanity. Its treason actually. If spending by the central government spurs economic activity, then how did we ever have a recession to begin with? between Bush and Owebama, they’ve added $11 TRILLION to the deficit in a mere 11 years. That is basically a whole additional year of GDP added to the economy.
And what do we have to show for it? Nothing. Zilch. If red ink spurred economic growth, then we would be in a new golden age in America with all the deficits we have. Sadly, such is not the case.

Read’em and weep; the chart above is from the US Treasury. Notice that tax receipts to the government actually rose during the Bush administration while his tax cuts were in place. In other words, lower tax rates lead to more revenue for the government. I know that may seem mystifying to most of you, but it is true all the same.
Think for a moment; if your taxes were lower, you personally would have more money to go out and spend on goods and services, correct? So if you go buy or invest more because of that extra money you had, thanks to a lower tax rate, businesses benefit from that. Their profits are higher and they can hire more people, who also will be able to spend more money on goods and services because they have a job now. All this was made possible because of lower tax rates.
The fact that Congress chose to spend far more money than we take in is no fault of the tax cuts. That is a wholly separate and different issue altogether. We’ve been borrowing 42 cents of every dollar we’ve been spending over the past decade. To cover that, we’d have to raise taxes 42% – something nobody, not even Owebama or even fascist Nancy Pelosi, seriously contemplates. The answer is austerity.
Now think back to our discussion last week about the film industry in Ohio, and how it has been thriving because of tax cuts. The principles I have been discussing are in action. Ohio offered tax incentives to the film industry to produce movies here. Hollywood came to the Buckeye State, spent money, created jobs, and actually increased tax receipts going to the government. The tax cuts for Hollywood proved to be a winning recipe for everyone involved. Tax cuts work.
Lets say lawmakers in Columbus decided to now go on a spending spree, and pissed a bunch of money they didn’t have up against the wall on some silly project. Lawmakers are prone to doing that sort of thing. Such irresponsible misconduct by the legislature would create a budget deficit. Critics might be so ignorant as to point to tax cuts, like those given to the film industry, as the cause of the deficits.
This is some pretty ridiculous illogic. Tax cuts, as we have proven, don’t create deficits. They actually increase the amount of revenue government collects from citizens engaging in commerce. It was the spending that caused the deficit! If government has X dollars in its budget, and chooses to spend more than that amount, then the deficit was created by the decision to engage in excessive spending. The original amount of money in the budget did not cause the deficit.
“The greedy oil companies are price gouging us!”
Gasoline prices are influenced by several things. Firstly, the price of a barrel of oil is set at the market. Oil prices today not only are influenced by supply and demand now, but projected issues of supply and demand months into the future. A barrel of oil pumped out of the ground and sold today, won’t end up in your gasoline tank for at least several weeks. Oil pries also fluctuate whenever there is political turmoil in supplier countries.
Oil companies have no control over the price of a barrel of oil. The market sets that. Get a clue. We’re reaping the bitter fruits of relying so much upon oil from the other side of the world. Whenever anyone sneezes ominously in the Middle East, oil prices spike. If we had a secure source of oil, that would not be the case.
Another reason gas prices are high is because of our borrowing, $5 TRILLION of which has occurred under HUSSEIN Owebama. Its a simple matter of economics. The Federal Reserve and Owebama have pumped trillions of red ink paper dollars into the economy. The demand for dollars worldwide as a currency has remained flat, and perhaps even ebbed. So what happens when demand for something is low, and its supply is high? Its value decreasess. Dollars are worth less. So it takes more dollars to purchase things, like gas and food. The lying thug government doesn’t include gas and food in its fake inflation data though.
“But Uncle Andy! Profits by the oil companies are obscene!”
The above map depicts gas taxes nationwide last year. Government makes about 48 cents on a gallon of gas. Exxon makes about 7 cents. Exxon’s huge array of billions in profits is made by the volume of gallons of gasoline it sells. Think about your own fuel consumption. You probably buy at least 15 gallons of gas a week. Multiply that by 52 weeks in a year. At 7 cents a gallon, that adds up. Consider there are probably 150 million drivers in America, and billions more worldwide, then that 7 cents a gallon adds up.
Why do you want to punish Exxon anyway? Exxon, like all corporations, is simply a confederation of people. Its workers, customers, and investors. Yes, the CEO at Exxon and many other corporations is probably a greedy, overpaid, reprobate. But there are plenty of oil platform workers, accountants, secretaries, janitors, scientists, and other common, everyday people like yourself at Exxon, who are not awful human beings.
As I said at the onset, what is a corporation? It is a band of people – workers, investors, and customers. If you slam a corporation with new taxes and costly regulations, the people you are actually hurting probably do not work in the boardroom. It is the common people who suffer with fewer raises in pay, or perhaps even layoffs.
Other people you’re harming are investors. Most of you are so ignorant and envious, you probably like the fact “fat cats” who invest in mean-spirited Big Oil are being taxed. Do you have a 401k or a 403b? Do you know anyone enrolled in a public retirement system, like a teacher or a police officer? Then it is almost a certainty that somewhere inside that portfolio is a mutual fund that has some stock in an oil company. It is a fact. So by smacking around Exxon with more taxes, you’re actually injuring a pension fund or retirement plan for someone like yourself or a public worker liberals claim to love so much.
I know life is tough. Times are tough. Some people, who are often rude, nasty, insufferable little cusses, have more than you do. It doesn’t seem fair, does it? We’re all better off taking our chances under the current system than to further Socialize our society so that we all have an equal share alright – of a whole lot of nothing.
Economics is more science than art. Things happen for a reason. Despite what you’re told, the fact that someone has two more nickels than you do is likely not the result of a grand conspiracy. There is probably a perfectly valid, sensible reason for the inequity. That doesn’t make the truth any easier to swallow, but it stands as the truth all the same.