Larry Kudlow: Tax hikes will sink the recession deeper

If you are in a recession, there is no point in raising taxes. That was a common sense view, shared by liberals and conservatives, Keynesians and supporters of the offer, but no more.

In our upside-down Biden world, where true is false, false is always false, recessions do not exist, inflation does not exist, fossil fuels do not exist and 75% of America does not exist, there is no sense on the left. So, let me try. In a recession, no taxes are raised and, to quote eminent economist Larry Lindsey, who will be here shortly, “there have never been two consecutive quarters of negative growth that ultimately weren’t considered recessive.”

My corollary tonight is: with high inflation, you don’t spend your keister out. Thus, in recent days, Congress, led by Democrats, but sometimes assisted by Republicans, has pledged to spend just over $ 600 billion on Schumer reconciliation project and another $ 280 billion in the CHIPS + social account, industrial planning, pork loot. So, in round figures, just under $ 900 billion.

In today’s personal income report, all inflation news was higher than expected. The PCE deflator rose 1% in June, after only 0.6% and 0.2% in the previous two months, with a 3-month change of 7.2% at annual rate.


Chuck Schumer

Senate Majority Leader Chuck Schumer of New York speaks to the media after a Democratic politics lunch on Tuesday, Oct.19, 2021, on Capitol Hill in Washington. (Photo AP / Jacquelyn Martin) ((AP Photo / Jacquelyn Martin) / AP Press Room)

Contrary to Wall Street wisdom, we have had two consecutive quarters of declining GDP, but inflation is rising anyway. On taxes, you’re looking at a $ 740 billion tax increase, including a harmful 15% alternative minimum tax on corporations, whose taxable income is less than accounting profits.

These corporations are not evil. They didn’t break the law. Instead, they are using tax credits and legal deductions, but mostly 100% immediate investment expenses, which increase productivity, real wages and typical family incomes. This minimum 15% tax will prevent them from making these crucial investments in job creation and technology improvement.

Ironically, Senator Manchin’s coal industry will be hit hard by this, as will all mining, minerals, fossils, manufacturing, and even financial services. This turns the stupid into the stupid. But guess what? Green energy tax credits would be exempt from the new corporate AMT. Isn’t it just a kick in the pants?

So, you could argue, and I will argue, that all of the Green New Deal’s obsessive climate change spending and the so-called CHIPS + add-on will drive up inflation, while tax hikes will sink the recession deeper.

By the way, these tax hikes are still not enough to cover all spending, so there is no “deficit reduction” in this fiscal high. To put it simply, this is not good. It is much better for Congress to do nothing and come home early. In fact, this is a kind of Biden administration story.

He took office in the midst of a fort economy, with growth of around 6% and inflation of less than 2%. They shouldn’t have done anything and by the way anyone can see that Joe Biden would have preferred to stay in his basement and do nothing, but no, they had to be activists: green activists, high-tax activists, high-spending activists, activists activists, fossil fuel-hating activists, activists for fiscally successful people, activists for open borders, activists who hate police, activists “I left Afghanistan too soon”, activists “I was short of dollars and with a late day in Ukraine “.


All this radical, bright, modern monetary theory, climate activism sank the economy in just 18 months, spawned border catastrophes, disrupted our culture, supported criminals, non-victims, and so on.

Folks, I don’t like activism, I’ve never done that. Years ago, when I was working for Reagan, CEA President Murray Weidenbaum said to the cabinet, “Don’t stay there, undo something.” I love. There is a reason Conservatives prefer limited government.


In fact, this is a good litmus test for congressional votes: if it limits the government, vote for it. If the government is expanded, vote against. The problem with the Bidens is that they tried to rule as big government, central planning and over-regulation activists and took down a big country.

So, folks, we have a lot of work ahead of us. We need to make America great again, again.

This article is adapted from Larry Kudlow’s opening commentary on the July 29, 2022 edition of “Kudlow”.

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