12 May 2016

Morrison's channelling of George W Bush will result in the same result for the budget.

During his budget speech Treasurer Scott Morrison said the phrase “jobs and growth” 13 times. It seems he is not a superstitious man. Students of the history of tax reform experienced a strange sense of déjà vu.
In 2003 US President George W Bush campaigned on a 10-year ‘economic plan’ for “jobs and growth” by cutting taxes. The centrepiece was the “Jobs and Growth Tax Relief Reconciliation Act”. It was the second part of the infamous Bush Tax Cuts, which began in 2001 and have dogged America’s finances ever since.
The rationale President Bush gave for those tax cuts needs little more than a nationality swap to stand in for Treasurer Scott Morrison.
“We’re helping small business owners looking to grow and to create more new jobs… By ensuring that [Australians] have more to spend, to save, and to invest, this [budget] is adding fuel to an economic recovery. We have taken aggressive action to strengthen the foundation of our economy so that every [Australian] who wants to work will be able to find a job.”

The US tax system is notoriously complex. Comparisons between it and Australia’s are fraught. Yet, striking similarities remain.

Both are tax cuts which will overwhelmingly benefit the well-off. Both aim to increase “jobs and growth” by encouraging investment. Both aim to “grow the pie”; that is, spur economic growth so that taking a smaller proportion of tax will still generate a larger tax base, in real terms.

The consequences – ballooning federal debt

In light of the similarities, it is worth considering how effective the Bush Tax Cuts were. In short, not at all.
In 2001 Conservative think tank, the Heritage Foundation, calculated that the first part of the Bush Tax Cuts alone would eliminate US national debt by 2010. In fact, US national debt more than doubled in that time; from $5.8 trillion to $13.5 trillion.
Now I'm not suggesting we'll have anywhere near that level of debt but if a comparison of policies is made we can expect to have much higher levels of debt. Indeed the LNP budget indicates a rise in debt is expected.
Copying past speeches is one thing, however learning from history is another thing and it is apparent that the LNP closes its eyes to such things.https://theconversation.com/profiles/tomas-fitzgerald-150124

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