Who Will Get the Last Laff?

Read it and weep, Dems:

The jewel of the Bush economic plan was the reduction in tax rates on dividends from 39.6% to 15% and on capital gains from 20% to 15%. These sharp cuts in the double tax on capital investment were intended to reverse the 2000-01 stock market crash, which had liquidated some $6 trillion in American household wealth, and to inspire a revival in business capital investment, which had also collapsed during the recession. The tax cuts were narrowly enacted despite the usual indignant primal screams from the greed and envy lobby about "tax cuts for the super rich."

Earlier this month the Congressional Budget Office released its latest report on tax revenue collections. The numbers are an eye-popping vindication of the Laffer Curve and the Bush tax cut's real economic value. Federal tax revenues surged in the first eight months of this fiscal year by $187 billion. This represents a 15.4% rise in federal tax receipts over 2004. Individual and corporate income tax receipts have exploded like a cap let off a geyser, up 30% in the two years since the tax cut. Once again, tax rate cuts have created a virtuous chain reaction of higher economic growth, more jobs, higher corporate profits, and finally more tax receipts.

This Laffer Curve effect has also created a revenue windfall for states and cities. As the economic expansion has plowed forward, and in some regions of the country accelerated, state tax receipts have climbed 7.5% this year already. Perhaps the most remarkable story from around the nation comes from the perpetually indebted New York City, which suddenly finds itself more than $3 billion in surplus thanks to an unexpected gush in revenues. Many of President Bush's critics foolishly predicted that states and localities would be victims of the Bush tax cut gamble.

Everybody's taxes were cut - EVERYBODY's. And when individuals and businesses are allowed to keep more of their own income, they don't all rush out and stuff the difference into backyard mattresses; they invest it, spend it, or save it, putting it back into circulation one way or the other. That's what the Laffer Curve reflects, and it is as established a law of economics as there is.

So why are deficits still a problem? Read & gnash your teeth some more, libs (and, regrettably, elected 'Pubbies):

Alas, all of the fiscal news is not celebratory. The CBO also reports that federal expenditures are up $110 billion, or 7.2%, so far this year as the congressional Republican spending spree rolls on.

You wanna cut the deficit? Cut domestic spending, particularly entitlement programs. Or else stop trying to pretend you give a rat's ass about the federal debt.

And lastly, something for the good guys to lament:

All of this brings us to the crucial policy issue of whether Congress will observe these new economic and revenue data and have the common sense to keep a good thing going by making the Bush tax cuts permanent. Thanks to inane budget rules in Congress the capital gains and dividend tax cuts are currently set to expire in 2008. (When was the last time a spending program in Washington expired?) One thing would seem certain: Raising the tax rates on capital gains and dividends would be a formula for choking off the expansion and reversing the stock market climb. Until now, the Democrats in Congress have in unison sanctimoniously charged that the government can't afford the price tag of making the tax cut permanent. But, of course, all this new fiscal evidence points to precisely the opposite conclusion: that we can't afford not to make the tax cuts permanent.

Will Republicans push this? Will they push spending discipline they themselves are not exercising? Or will they meekly bend over and grab the ankles yet again, paving the way for an ouster from the majority that would be entirely self-inflicted?

We know what the Dems will do if they get Congress back. Do elected GOPers? Do they even care?

The last "Laff" is waiting to be had. If the Donks end up with it, it'll establish that political anhedonia (aka "elephantitis") is incurable.

[via B4B]