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A slim majority of Californians did something strange on Election Day. They voted to make themselves worse off while boosting the economies of Texas, Arizona, Nevada and other states. They did this by passing Proposition 30, the brainchild of Democratic Governor Jerry Brown. The ballot initiative raises the sales tax from 7.25 percent to 7.5 percent and imposes higher income-tax rates on many Californians. The top marginal tax rate goes from the current 10.3 percent to 13.3 percent, one of the highest in the nation. The higher income taxes will lapse in seven years — but are retroactive to Jan. 1, 2012! In Proposition 30, Brown entreated Californians to join him in a soak-the-rich scheme, sold as a panacea for the state’s financially stressed school systems. However, Proposition 30 will hit almost all Californians. Both rich and poor families will pay higher sales taxes. One recent study found that millionaires don’t move from California to avoid income taxes — but Proposition 30’s threshold starts at $250,000, imposing new burdens on thousands of already heavily taxed families. Many beleaguered taxpayers are … Continue reading

Barack Obama’s political fate depends on a group of Americans he hasn’t done much to cultivate — the rich. Presidencies can succeed or fail on one transcendent issue. With George Bush, it was Iraq. Obama’s burden lies in delivering on his ambitious policy goals without bankrupting the country. Obama wants to spend at a time when America’s fiscal prospects are dire. In the midst of the worst economic crisis since the Depression, Washington’s red ink has swelled beyond anything ever seen in peacetime — $1.8 trillion this year, $1.4 trillion in 2010, $970 billion in 2011 and $658 billion in 2012, according to the Congressional Budget Office. All told, the CBO estimates that Obama’s four-year deficits will push the public debt from 40% to 70% of GDP — profligacy exceeded only in the 1940s by Presidents Roosevelt and Truman, who had a world war to win. These numbers cast a dark shadow over Obama’s re-election prospects and political legacy. Once the economy pulls out of its current crisis, he’ll be judged — fairly or not — on how well he … Continue reading

The Reagan revolution began during a recession almost as severe as the recent one. The administration cut taxes and reduced government’s role in the economy by deregulating, privatizing and freeing trade. These policies sent a strong message in uncertain times for the U.S. economy — government wasn’t the solution. For the next quarter-century, the political center of gravity held that government meddling retarded economic growth and freer markets drove it. Events vindicated this strategy. The U.S. prospered, the socialist Soviet Union collapsed and China emerged to lead the world in growth as it opened its economy to free enterprise. Now, a deep, long recession has dimmed memories of capitalism’s heady days and eroded public confidence in freer markets. An economic rebound over the next decade isn’t likely to bring back the capitalism that reigned from 1982 to 2007. We will see government take a larger role in the economy — like it or not. Expanding government completes this six-part Investor’s Business Daily series on the post-recession realities for the six drivers that propelled the U.S. economy from 1982 to 2007. … Continue reading

An intriguing aspect of today’s economic mess is renewed interest in the Great Depression, the calamity that engulfed most of the world in the 1930s. Since Jan. 1, 2008, the two-word soubriquet appeared in 753 New York Times articles, a fivefold increase over the previous 17 months. To no one’s surprise, nearly all this Great Depression talk centers on the darker side of down times — unemployment, falling prices, bank failures, foreclosures, dispirited stock markets, bread lines, soup kitchens and Hoovervilles. The message rings loud and clear: We don’t want to go there again. Digging a bit deeper, though, we find there’s more to the story of the U.S. economy in the 1930s. Telling it even briefly provides some messages relevant to what we’re going through today. The Great Depression took a fearsome toll, no doubt about it, but economic progress didn’t grind to a complete halt. During the 1930s, some industries saw spectacular growth. Many households saw their living standards improve. Far-sighted entrepreneurs, undaunted by the hard times, introduced new products and created new companies. On The Go A … Continue reading

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