July 15, 2010

Deficit truth and voodoo economics

Posted in economic recovery, federal budget, GOP, taxes, U.S. Economy tagged , , at 10:56 am by realitytax

If the GOP is really serious about deficit reduction why does Sentator McConnell (R-KY) say it’s a “uniform view in his caucus that tax cuts needn’t be offset by other changes in spending” — do none of them think tax cuts affect the budget? There’s ample evidence that the tax cuts enacted under the previous administration were, in fact, the largest factor in rapidly turning the Treasury’s surplus in 2000 into the deficit under a Republican administration which mostly enjoyed a Republican Congressional majority.

What kind of voodoo budgeting lets you ignore a revenue decrease?  We lost 3 million manufacturing jobs while Bush was President, but the GOP line is that tax cuts will help?  Tax cuts don’t put groceries on the table of an unemployed person, but they do add to the deficit – it’s not complex math.

We’ve got to get more rational in discussing the budget and the deficit. The economy can work – productivity has nearly doubled in this country in the past 30 years, and corporate profits are obviously robust even as CEO salaries and bonuses have sky-rocketed.

Leaders who will safeguard the interests of ordinary citizens are becoming an endangered species in the Congress. In late summer 2008 Congressional leaders and the Bush administration told the country that big business needed behemoth bailouts our our entire economic system would collapse, but that Wall Street bailout did nothing to save blue collar jobs, reverse the outsourcing trends, or stimulate job creation. The bailout didn’t even stimulate lending, it just gave banks cash that went to year-end bonuses.

Bonuses – seriously. What other industry would award bonuses when they had to get billions to remain in business?

And now Senate Republicans want to balance the budget (and stir up fears about deficits) while they claim there’s no need to offset tax cuts with other revenue?  Think about that.  Tax cuts may or may not make be your cup of tea; they’re a tool in the economist’s arsenal. Yet to claim on the one hand deficits are bad and then turn around and advocate revenue reduction — in this case by providing tax cuts for the wealthiest citizens — without offsetting it in any way defies the reasoning powers we expect in our elected leaders.

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