It’s good to see common sense is winning the day in Merkel’s Germany and Bajnai’s Hungary, both of which have called for tax cuts to stimulate economic growth during this deep recession. Even the minority socialist members of government in Hungary agree. Sometimes doing the best for the country does indeed come before ideology. Of course, neither country is alone, since this is precisely the approach the IMF has recommended for Hungary to spur on growth.

Then again, it’s not as if this were something socialists and their “progressive” counterparts on the left truly miss, and if you doubt me, just look at the myriad national and local governments run by liberals that offered tax incentives to bring a new business or event into their domain. So clearly they know this and we know this and it is likely that they know that we know this, so what is this charade all about?

In today’s Wall Street Journal, a writer mentions that with tax cuts creating deficits, “government may have no choice but to raise taxes.” This is probably the real matter: there are some who choose to put government and its power interests first, and there are others who choose to put the people, their right to personal control as well as proper funding and accountability of government first. Once again we arrive at the nexus that tells us it is not about money except that it is a tool by which one may acquire greater power at the expense of the other. Those in the second group would suggest that if there is a deficit, perhaps government should do what its citizens are doing these days and tighten its belt by reducing expenses through greater efficiency and butting out of the people’s business where it doesn’t belong anyway.  

Unfortunately, the power issue is the sacred cow of the left. They see themselves as anointed to save the stolid masses from themselves (as well as more self-serving reasons). Many of these elected officials often have personal reputations as not very nice people, which of course belies their affectations of compassion, by which they ram more legislation through that empowers none so much as them.

So let get this out in the open: every educated and thinking person knows that raising taxes discourages investment, slows economic activity, and helps to create or exacerbate economic downturns. And as the Laffer Curve has shown us for some time now, there is clearly a point of taxation beyond which any returns diminish quickly. One might obviously point out that below a certain point in that curve, government does benefit from taxes; however, in most every country on earth today, we are beyond that point.

Not only are income taxes high, but so are other taxes, all of which make up a volatile cocktail of guaranteed economic stagnation.  But that, I suppose, is a good thing for those in government simply interested in their own power and for the ideologues who think such governmental power is the means to some long-ago disproven utopian end.

For all those who believe in the supremacy of government to solve all of the pressing concerns of the people, one need only look at the skeleton of the Soviet Union that now lies dead from starvation along the road of history. That regime sought to make government – and its self-serving agents – the center of the country’s economic universe, but only succeeded in exponentially expanding the misery of its people through one of the worst economies in history and the egregious violations of their rights and personal freedoms. This, as we have learned, is not the way to go to solve economic problems.  

None better then to lead the way than Angela Merkel, who herself has grown up under the East German communist satellite state of the Soviet Union and does indeed know a thing or two about good economics. President Obama should take note and learn from someone who has more than a cursory understanding of what works and what doesn’t and who clearly has, along with her counterparts in Hungary, sought to put the interests of the people ahead of short-term government empowerment. That may sound like heresy to Mr. Obama, but it truly is the reason the Office of President and the U.S. government itself were created in the first place.