Friday, March 28, 2008

Economics Not A Republican Strong Suit

The Bush tax Cuts v Safety Nets

The economy isn’t looking too good right now. We’re in what appears to be another recession. De-regulation devastated the stock market here and around the world, middle class income is down $1000 over the last 4 years, national savings plunged, the country racked up a large trade deficit, the nation's cumulative debt has nearly doubled since Bush took office exceeding $9 trillion, the housing market bubble burst, the number of homeless families is increasing, baby boomers are retiring and straining Medicare’s solvency, the Iraq and Afghanistan wars are paid for with borrowed money totally nearly three trillion dollars and more people can’t afford health care coverage.

How about a tax cut?

If your cool-aid drinking Republican, what other choice is there? After all, as a fiscal conservative, you automatically know how to manage money through blind ideology.

In a March 28, 2008 Washington Post article titled, “As Candidates Warm to Bush Tax Cuts, Economists Warn of Long-Term Effect,” the harsh reality of politics sneers in the face of real solutions.

  • “Bush and other politicians are telling voters alarmed by a sagging economy that keeping the cuts past their 2010 expiration date can help revive the nation's fortunes, a claim many economists say is nonsense. Far from acting as an economic tonic, the tax cuts "are neither sustainable nor beneficial" without massive cuts in government spending far beyond what Bush or any candidate to succeed him has proposed,’ said Alan Viard, a former economist in the Bush White House who is a resident scholar at the American Enterprise Institute.”
  • “Out of curiosity, Viard asked a research assistant to put together a list of spending cuts and revenue hikes to cover the cost of making the Bush tax cuts permanent. Her findings? For starters, the government would have to slash benefits for Social Security, Medicare and Medicaid recipients. Any such package is political death,’ Viard said.”
Funny, I was thinking such a package would result in a large number of human deaths. Like the individual rights constitutionally bestowed upon corporations, it was silly of me to discount politics as something less than human. The article went on to explain the reason why there were tax cuts in the first place.

  • “Conceived during Bush's 2000 presidential campaign as a means to return what were then huge government surpluses to taxpayers, the cuts were approved by Congress in the midst of a recession, which worsened after the Sept. 11, 2001, terrorist attacks.”
Common sense would tell you that surpluses during a recession would lessen the impact of dwindling federal taxes collected. Kind of like a rainy day fund. Here in Wisconsin, we had a similar experience when the state collected more money than it currently needed. Republicans were quick to give it back in the form of a rebate check. A strange thing happened the next biennium. The state came up short the exact amount of money returned in those rebate checks.
It was a lesson in money management. Tax surplus’s should be saved or invested in projects that create jobs and improve the state’s quality of life. Plus, no tax increases.

Here’s where the facts get tricky. The numbers in the following two points are dramatically different, yet described as the same. Another dangerous sign that everything is equal, relative to the argument.

  • “Bush and other Republicans, including McCain, want to make them permanent. That move would deprive the treasury of $2.4 trillion over the next 10 years, according to the Joint Committee on Taxation.
  • The middle-class tax cuts also reduce revenue -- by about $800 billion over the next decade, according to an analysis by the Tax Policy Center, a joint project of the Urban Institute and the Brookings Institution.”
Strangely, $2.4 trillion is the same as $800 billion, according to Len Burman, the director at the Tax Policy Center.

  • "They (Democratic presidential candidates) said President Bush was fiscally irresponsible for enacting the tax cuts, but on balance, they would increase the deficit by just as much."
It’s obvious that the Democratic plan is more responsible. It doesn’t eliminate many of the problems set in place by the opposition party over the last three decades, but it will be a taste of economic freedom not many have experienced. Yes, an economic freedom that will help people prosper despite a progressive tax system, social safety nets and an attempt to distribute of wealth. A freedom from health care bankruptcy’s while having the ability to try something new as an entrepreneur and still be medically covered.

Freedoms just another word for trying something new.

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