Greenspan’s recent rate cuts are not working, because the Fed still isn’t creating enough credit to alleviate the economy’s dehydration. It’s like going to a gas station and finding that the price of fuel is lower, but the gas station won’t sell you more than a gallon of gas at a time, and even that only once a month. You are still not going to drive very far, very fast.
Another culprit is taxes. The political culture can never seem to accept this simple but basic truth: Taxes are a burden and a price. The taxes people pay on income, profits, and capital gains are the price they pay for working, for being successful, for being willing to take risks. America’s very prosperity has pushed people into higher tax brackets, punishing and burdening them and decreasing their incentive to engage in further productivity. Moreover, millions of taxpayers are ruefully discovering that various deductions and tax credits are phased out when they exceed certain income levels. Millions are also getting hit with the Alternative Minimum Tax, designed 30 years ago to catch tax-dodging millionaires, but now crushing more and more middle-income taxpayers. Millions of Americans now run their businesses as sub-chapter S corporations, which means that their business income is taxed as personal income.
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