Saturday, October 2, 2010

Keep America Broke

Last Wednesday I received a newsletter from Cathy McMorris Rodgers in which she tells us how upset she is that Congress adjourned without extending the Bush tax cuts set to expire on Dec 31.

The fact that Congress would adjourn without extending the tax cuts of 2001 and 2003 – putting America’s families and small businesses at risk of a $3.9 trillion tax increase over the next 10 years – and exacerbating the economic uncertainty already felt throughout the nation – is the height of irresponsibility and recklessness.”

Since we're on the topic of irresponsibility and recklessness, let's have a look at what the Center for Budget and Policy, using numbers from the Congressional Budget Office, had to say two years ago.

Just two policies dating from the Bush Administration — tax cuts and the wars in Iraq and Afghanistan — accounted for over $500 billion of the deficit in 2009 and will account for almost $7 trillion in deficits in 2009 through 2019, including the associated debt-service costs. These impacts easily dwarf the stimulus and financial rescues. Furthermore, unlike those temporary costs, these inherited policies (especially the tax cuts and the drug benefit) do not fade away as the economy recovers.

Without the economic downturn and the fiscal policies of the previous Administration, the budget would be roughly in balance over the next decade. That would have put the nation on a much sounder footing to address the demographic challenges and the cost pressures in health care that darken the long-run fiscal outlook.

Notice the huge contribution the Bush tax cuts make towards making the deficit worse. That's what our congresswoman is aiming for.

So who's being irresponsible and reckless?


Anonymous said...

It's so hard to know what causes these economic problems because they're so complex. I guess the war in Iraq/Afghanistan is super expensive, but who is to say it hasn't kept the USA safer, or led to improved living for folks in those countries. So I don't know if we would be better off one way or another regarding the war; and I think this is not knowable.

Also, wasn't it Clinton's mortgage policies, like forcing banks to create mortgage products for low income individuals, that led to the housing debacle? If the housing market hadn't spiraled up out of control, then crashed, I think we would be doing pretty well financially. So I guess what I'm asking is wouldn't the Bush tax cuts be a minimal issue if the housing crisis had not happened?

But then, maybe the tax cuts created enough free capital for people that they could get into bad mortgages which ultimately led to the housing crisis. Who can seems to be all opinions without any verifiable facts.

Hank Greer said...

The economic issues are complex and to say that letting the tax cuts expire creates uncertainty and kills jobs is disingenuous. But there's no denying the effect the tax cuts have had on the deficit.

I find it very difficult to believe that after hundreds of thousands of deaths and millions being displaced, the people of Iraq are better off than before we invaded them for no reason. Yes, Saddam Hussein was a dictator and he committed atrocities, but other dictators--some worse--are left alone.

The history of Afghanistan is lost on us and we are paying the price of occupying that country just as all invaders before us have.

Democrats and Republicans in Congress share the blame over the years for chipping away at the regulations overseeing the banks and financial markets. The recent financial reform is a small step forward after taking five giant steps backward in today's mother-may-I game of political influence.

Caveat emptor is the name of the game when the government is not allowed to watch out for us. It's like buying tomatoes that are sealed in a paper bag. You can't see them, smell them or examine them. After buying them you find they are spoiled and you complain. The so-called free market currently being pursued by the Republicans would tell you that you need to be wiser in your purchases. And if you don't like that seller then switch to another. We're told that companies won't act in a manner that's detrimental to themselves and yet history--even recently--has proven that's not true. People in the financial markets knew they were dealing with crap, some to the point that they were actually betting on it and made tons of money as a result. To them the rest of us were suckers. Is that how you want your free market to work?