Tonight I had the opportunity to watch the State of the Union; which outlines Bush’s final plans for America in the coming year. As the President’s final months come to pass, he is also trying to set some of his legislation chiseled in stone. Of course I am referring to his tax cuts that he introduced in 2001 and 2003. Here is just someone’s opinion on what the tax cuts could do if they are implemented in the tax code for good.

“If Congress makes the tax cuts permanent, the major economic benefits begin in 2011. For example,

Total employment will rise by 1,087,000 jobs per year, on average;
Annual GDP will be over $111 billion higher, after inflation;
Personal savings will grow by $163 billion per year, on average, after inflation; and
After-tax household income will grow by an annual average of $274 billion per year, after inflation.”

Am I true believer of the tax cuts that the Bush administration has put into place over the past eight years? Take a wild guess? No, of course I don’t. Do I believe in lowering taxes? Hell yes I do, but the administration is still going about it the wrong way. I’ve said this over and over now, but the mainstream media still won’t cover the real long-term damages that these tax cuts will have on America without cutting spending. How does the government really expect to purchase all this fancy military equipment without increasing taxes? I am not in favor in cutting military budgets, by any means. I would love to see an increase in domestic military spending and a large decrease in international spending though. It’s like the game of ‘Risk.” It’s much easier defending your boarders than to have your armies spread out all over the map. The Bush administration needs to cut their credit card in half and burn it.

People need to understand that I am not in favor of increasing taxes. I truly believe that raising them will inevitably throw us into a depression, but we must lower our spending habits to save our nation’s future. My first idea that the government could implement that could save them a lot of money, while also cutting taxes for all Americans, is lowering government spending in the private sector.

There are many government programs that tax every single business, but only benefit a few. Here is just an example that helps one industry, but damages another. If the government gives a 10 billion dollar grant to an oil company for global expansion, this will inevitably hurt the alternative oil industry. What happened to the invincible hand of economics that we’ve preached about in econ classes for so many years? Here’s a quick definition - “Smith claims that, in a free market, an individual pursuing his own self-interest tends to also promote the good of his community as a whole through a principle that he called “the invisible hand”. He argued that each individual maximizing revenue for himself maximizes the total revenue of society as a whole, as this is identical with the sum total of individual revenues.”

The other factor here is that every single business will have to pay for some of this “free” grant money. A small business owner in Georgia that makes doo-dads will not see a return in this situation. All they will see is a tax hike in their quarterly payment. Imagine this scenario but a 100 times larger. Government spending has corrupted our nation and truly damaged our economic future. We need to let business fuel themselves and add the real sense of an American meritocracy. In a perfect environment a large business would loan a company the 10 billion dollars and expect some kind of return. That is the true sense of American investing. Business investing in business for the betterment of both parties.

Can we really get out of this hole we’ve dug by implementing tax cuts and still allow rampid spending? Something needs to change… What do you think? What do other people think?