First of all, I'm not proposing a tax increase on anyone. But I'll take one last whack at trying to clarify why the mantra that if we lower taxes demand and employment will increase isn't working.

30-40 years ago, when the U.S. was a major producing nation, exporting all kinds of products to buyers in other countries all over the world, the basic economic theorem you have stated worked perfectly.

But what has happened in the intervening decades is that the U.S. has become a major consuming economy rather than a producing economy. The measure of that is the trade balance of payments, which has been growing increasingly negative for years. While we still export a lots of goods and services, the problem is we import a whole lot more.

So now, when we apply the economic mantra you have stated, reducing taxes doesn't have the leverage it used to have in creating economic growth and additional employment. What's increasingly happening now to the savings resultant from tax reductions is that when consumers ultimately spend those dollars, it is more and more likely they will buy products produced in foreign countries. That means that a substantial portion--not all, but an increasingly substantial portion--of U.S. consumer purchases are being spent to buy foreign goods made by foreign workers.

The "trickle down" still works, but in increasingly large measures, it's resulting in increased employment outside the U.S., not new jobs for Americans. Tax reductions simply don't get us the bang for the tax reduction buck that they used to.

The solution to this serious economic problem is a complicated one. But one thing is for certain--when our politicians stand up and tell us that they're going to a good thing and get our economy rolling again by reducing taxes, it may tend to make people like them more and vote for them, but that action alone WILL NOT cause a major recovery in economic growth and a reduction in unemployment.

While it may seem counterintuitive, what will be a more powerful lever in improving our economy is for the government to reduce spending while possibly at the same time selectively targeting some tax reductions.

The problem is that our politicians have told us, the people who vote for them, only half the story year after year in their campaigns to get re-elected. They continually talk about cutting taxes while at the same time tell us of all the wonderful new spending programs they got approved for us. It might be a new bridge, an increase in entitlements, the tremendous cost of continually fighting wars all over the world, or any of a myriad of new spending programs they dream up to keep us happy and voting them back into office year after year.

Did you ever ask yourself why our Congress quietly let the Budget Enforcement Act of 1990 (the Pay Go bill) "sunset" and go away in 2001? That bill required government spending to be funded by revenues. It required a balanced budget. There were no increases in the national debt for the ten years it was the law of the land. But the administration at the time let the law expire. Then, within three years the Congress approved the largest tax reductions in the history of the country, whle at the same time they went on a spending spree that even members of the majority party described as "spending like drunken sailors". We, the people who sent them to Washington, loved it. Who wouldn't like reduced income taxes while at the same time getting all kinds of expensive new "stuff" paid for by the government?

The effect of increasing spending while at the same time reducing federal revenues (taxes) has the same effect as it would have in anyone's household budget. A family cannot keep spending more than it takes in for very long before it goes broke! Families have tried to limp along by borrowing more on their credit cards, getting new cards, or getting a second mortgage on their house. The U.S. has done the same thing by borrowing from other countries. But the end game for both individual families as well as sovereign nations who are fiscally irresponsible is the same. We will go broke!

As I've said here before, the jig's almost up. China is already begun reducing the amount of U.S. bills and bonds that it holds--they sold off $64 billion last month alone. When our politicians find they can't pay for the day-to-day government expenditures, only one of two things can fix the problem. They will either have to dramatically and quickly cut spending...or they will have to raise taxes! Oh, I forgot, there's one other thing they can do first--print lots more money. The effect of that will be a rapid drop in the value of the dollar and equally rapid increases in the rate of inflation. Sure, people will bitch and moan about inflation and the Congress will hold hearings, and they may even squeak thru and get re-elected again. But in the end , the result will be the same--we'll go broke.

Please, please, don't try to convince me that we can cut taxes enough to cause our economy to return to a reasonable level of growth and cause employment to be reduced to former accpetable levels. It cannot happen.

And as I've said here before--if we continue to listen to those self-serving arguments from politicians trying to get re-elected, believe that stuff, and maybe even repeat it to others, such as on this forum...all we're doing is endorsing the political behavior that has gotten us into this mess in the first place. If we don't demand the right actions from our elected leaders, meaning we're all going to have to suffer quite a lot, each and every one of us will experience a major change in our way of life. It will be worse for our kids and grandkids.

Think about what I've said and don't just continue to repeat the mantra that the politicians drone on about in their campaign speeches. It ought to be obvious to everyone that it isn't working!

And please don't lecture me on Economics 101. Both my formal and practical study of economics has gone far beyond that.