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March 29, 2009

McCain gets his facts wrong on MTP

Watching Mr. Gregory interview Sen. McCain this morning I was struck by an assertion McCain made. They were discussing the huge deficits projected for President Obama's latest budget proposals.

SEN. McCAIN: Yeah. No, no nation can spend this way and get out of it without debasing the currency and us returning to a period that we had in the late '70s and the early '80s where we had inflation, a high unemployment and higher taxes, because it, it--you can't do it.

Higher taxes? In contrast to when?

The Post-War period from 1945-1973 was the Golden Age for the American economy. Except for a very brief increase in the early '50s the personal income tax rate topped out at a whopping 91% and the lowest rate was 20%. That continued until 1963 when the rates were slightly lowered across the board. The minimum rate remained a steady 14% from 1966 through 1976, at which point the minimum rate was LOWERED to 0%. The maximum rate remained at 70% from '66 through 1981. So, in fact, taxes were trending LOWER during the period Sen. McCain cited than during the bulk of our economic "Golden Age." (numbers via The Tax Foundation)

Let's look at deficit spending history.

Note the run-up in debt starting in 1942. That's equivalent to $10 trillion today. That pulled the economy out of the great depression and into high gear to win World War II.

Well imagine that! McCain is worried about deficit spending against the historical backdrop not only of it having been far higher right after the last economic implosion but also that of Saint Ronnie starting the trend back towards deficit spending - which was interrupted by President Clinton and then continued by Dubya. And of course Saint Ronnie founded the religion of deregulation.

I certainly do agree that deficit spending is worrisome and that runaway national debt is also worrisome. But the historical facts simply do not appear to back up Sen. McCain's assertions.

During our Golden Age taxes were higher and regulation was much more robust than Sen. McCain's dogma recognizes as righteous.

Posted by Kevin at March 29, 2009 09:59 AM