From a Yahoo! "news blog" this morning they make the claim that Newt Gingrich wants to change the mission of the Federal Reserve by removing their mandate to increase employment. They also claim in the same story that Gingrich wants to give wealthy financial industry tycoons like Warren Buffett a big tax cut.
On the surface, and in their reporting, these claims appear valid.
Until 1975, the only lawful mission of the FED was to control inflation. In '75 a Democrat congress expanded that mandate to include increasing employment. While that sounds good, it is not. The two are not compatible. No one can serve two masters and do a good job of both.
Gingrich wants the Fed to focus on inflation, as was their task since 1913. He understands that "money maneuvering" is not the way to increase employment, at least not in any permanent or meaningful way. This has been proved by the Fed's succession of "quantitative easing" programs aimed at spurring growth and jobs. Those measures haven't produced a strong and sustained recovery, yet it has cost our nation dearly. And in printing all that money, they set the stage for inflation - violating their first and most important mandate. As Gingrich states on his website, "The same policies that the Fed uses to try to force job and economic growth are also the mechanisms that most dangerously weaken the value of the dollar by promoting inflation..."
Yes, we want higher employment. But the task of achieving that should never be in the hands of the Fed.
As for giving big tax cuts to Buffett and his ilk, only fools fall for that line. Buffet does not pay taxes. No matter how high you tax the wealthiest folks, they will not pay those taxes. They do not have to. There are loopholes, and shelters. For example, Buffett only pays himself $1 a year. So go ahead, liberals, increase his tax from 35 cents to 50 cents. Do you really think he will mind?
Furthermore - and I have proved this many times over the years - only the poorest Americans pay taxes. That's because they are in no position to "pass them down the line" because there is no one below them.
When you increase the taxes for Bill Gates, he simply raises the cost of Windows products, and thereby has the consumer pay his taxes for him.
By increasing the tax on the wealthy, the only ones who pay the price are consumers - and usually the poorest ones. And when consumer prices increase because of higher taxes on the wealthy, consumers have less to spend, resulting in reduced demand. Reduced demand results in manufacturing cut-backs, which ultimately results in lay-offs and higher unemployment.
Hence, increasing taxes on the rich only results in higher prices, lower demand and higher unemployment. That has been proved over and over in the last several decades since Woodrow Wilson and the Democrat Congress illegally created the FED in 1913, and later when the government changed the Constitution to allow "progressive" taxation.
So, Gingrich is correct - the Fed needs to get out of the business of creating employment because they cannot do it. And taxing the rich will hurt the economy, not help it.
Obama and the Democrats keep saying Milton Friedman's Nobel Prize winning "trickle down theory" does not work. But it was used by Reagan and the American economy boomed for 20 years. The Dems say, "Yeah, but it finally burst." Yes, it did burst - but only because Dems again took the helm, passed overly-burdensome regulation, failed to reign in Fannie Mae (which Dems created), and the huge "dot-com" bubble burst and THAT is what caused the economic failure.
Free markets for the first 170 years of our nation, with limited regulations from the government is what built America into the wealthiest, most powerful nation on Earth, in record time. To say free markets do not work because government regulations strangled those markets is an absurd idea.
You live, you prosper, you grow. But if someone puts a noose around your neck and tightens it, or ties your hands and feet to restrict your free movement, you will wither and die.
And so will business, our economy and our nation.