Anybody who follows Peter Schiff knows he has a knack for pegging what’s right or wrong with the US economy. There’s a good bio of Schiff at The New American, and a single statement is key to placing in context this financial guru who appears on talk shows and is quoted in print: “Schiff became an Internet phenomenon last year after YouTube activists posted a compilation of his amazingly accurate predictions of the current economic crisis during 2006 and 2007 on national television shows, while other television pundits laughed at him.” It's not surprising Schiff disagrees with Democrats on a tax increase.
Schiff took on President Barack Obama’s tax controversy shortly after Obama made a Labor Day speech to supporters. Like many of us who aren’t financial gurus but who have a finger on the pulse of small businesses, Schiff thinks any tax increase right now is a lousy idea.
On the video, Schiff gets into the crunchy part of the Obama economic cookie shortly after the 2 minute mark. The one-time Republican Senate candidate—how did voters let this guy slip through the Primary net?—said the U.S. needs more savings and investment.
The gist of what Schiff said is that we need incentives, not punishing taxes—“Incentives play a large part in growing the economy,” he said. “The president hasn’t figured this out yet.”
Schiff said taxes and burdensome regulations are one reason more people are investing abroad.
And lest you think it’s a good idea to keep dropping money downward in hopes the low earners will spend more, be warned that Schiff thinks it’s a lousy idea. You end up with people buying stuff, yes, but that stuff is often made in other countries.
Schiff believes government must be downsized. After all right now the US government is borrowing record sums. “If government doesn’t diminish its own spending…the result is a huge deficit. Money for government borrowing comes directly out of capital formation,” he said.
And the problem isn’t spending—it’s lack of saving and investment.
“We’re spending everything,” Schiff said. “The problem is we’re not saving enough, we’re not investing enough and we’re not producing enough.”
And a Democrat tax increase on any income range will not help because as The US Report has noted before, every time the government raises the tax rates, spending increases. Look to history.
As President Bill Clinton projected higher taxes AND higher spending in 1993, a Heritage Foundation backgrounder noted, “A Joint Economic Committee report found that every dollar of higher taxes since 1947 has resulted in $1.59 of higher spending. This statistical survey is supported by recent history. Tax increases in 1982, 1984, 1987, and 1990 all were enacted for the alleged purpose of deficit reduction. In every case, however, the deficit rose the following year because lawmakers could not resist the temptation to spend the expected new revenues. Nowhere in the Clinton plan are there any proposals or mechanisms to counter this propensity of higher taxes to trigger more spending and higher deficits.”
Watch Schiff’s video. It makes more sense than any politician suggesting a tax increase on any income level.