The Fight Over the Bush Tax Cuts
There is a battle brewing in the halls of Congress and its not about illegal immigration. This is about the massive debt and huge yearly deficits and how to balance the budget.
Ten years ago, then President George W. Bush signed into law the first of 2 bills passed under the parliamentary procedure called reconciliation that cut taxes for the majority of Americans. Republicans couldn't get the necessary 60 votes for cloture so they used reconciliation to pass the bill, however because they used reconciliation, it meant that the taxes were only temporary and set to expire in a decade if not made permanent by a future Congress. The first tax cuts were signed in 2001 and are set to expire at the end of this year, which just happens to be an election year and why there is a battle brewing.
Getting the deficit under control is going to be a topic that won't go away for many years in the United States. No one wants to be another Greece, although that is a remote possibility in what is still a robust and powerful economy. For his part, the President has appointed a bipartisan debt commission, waring Congress that everything will be on the table. Although, it would have been a binding commission had Republicans and a few Democrats not blocked the formation of such a commission in the Senate. But, that's old news.
For Republicans, the answer has been, and ever shall be, cutting taxes to spur growth with lots of military spending. Except that in this case, the tax cuts being discussed actually caused the greatest portion of the structural deficit that the Federal government and the country face today. The Bush tax cuts amounted to over $650 billion dollars that was never paid for and simply added to the deficit. On top of that, President G.W. Bush and the Republican led Congress signed into law one of the largest expansions of Medicare in history with a new drug plan, all while lowering government revenues and adding the cost to the deficit as well. There were those two wars that were just added to the deficit as well, but who's counting?
On the political front, Republicans are painting the issue as Democrats raising taxes on small business, hurting job prospects. In reality, Democrats are actually only interested in letting the tax cuts on the wealthiest 3% of Americans expire while continuing the tax cuts for the shrinking middle class. The interesting thing is, that it appears that despite all of the cries from Republicans about Democratic spending on the stimulus package to stave off financial disaster, they themselves aren't actually interested in the deficit. The way the GOP has decided to make this an election issue belies their past positions of overspending and cutting taxes, which we know now is a toxic mix. Continuing to pay for tax breaks for the rich with borrowed money will not balance the budget at this point, especially for the richest Americans who have seen their fortunes rise while the middle class has been eroded.
To put a point on it, David Stockman who was a director of the Office of Management and Budget under President Ronald Regan had some harsh words for modern Republicans. He began bluntly stating, "If there were such a thing as Chapter 11 for politicians, the Republican push to extend the unaffordable Bush tax cuts, would amount to a bankruptcy filing." And it got worse from there.
He lays out what he calls the 'Four Deformations of the Apocalypse', and hammers Republicans for their blind faith in Friedman economics after seeing it bring about this latest economic collapse. As an example Stockman asserts, " The second unhappy change in the American economy has been the extraordinary growth of our public debt. In 1970 it was just 40 percent of gross domestic product, or about $425 billion. When it reaches $18 trillion, it will be 40 times greater than in 1970. This debt explosion has resulted not from big spending by the Democrats, but instead the Republican Party's embrace, about three decades ago, of the insidious doctrine that deficits don't matter if they result from tax cuts."
The piece is an excellent read and I highly recommend that you click the link and read it for yourself, because this fight is only going to get bigger.
Ten years ago, then President George W. Bush signed into law the first of 2 bills passed under the parliamentary procedure called reconciliation that cut taxes for the majority of Americans. Republicans couldn't get the necessary 60 votes for cloture so they used reconciliation to pass the bill, however because they used reconciliation, it meant that the taxes were only temporary and set to expire in a decade if not made permanent by a future Congress. The first tax cuts were signed in 2001 and are set to expire at the end of this year, which just happens to be an election year and why there is a battle brewing.
Getting the deficit under control is going to be a topic that won't go away for many years in the United States. No one wants to be another Greece, although that is a remote possibility in what is still a robust and powerful economy. For his part, the President has appointed a bipartisan debt commission, waring Congress that everything will be on the table. Although, it would have been a binding commission had Republicans and a few Democrats not blocked the formation of such a commission in the Senate. But, that's old news.
For Republicans, the answer has been, and ever shall be, cutting taxes to spur growth with lots of military spending. Except that in this case, the tax cuts being discussed actually caused the greatest portion of the structural deficit that the Federal government and the country face today. The Bush tax cuts amounted to over $650 billion dollars that was never paid for and simply added to the deficit. On top of that, President G.W. Bush and the Republican led Congress signed into law one of the largest expansions of Medicare in history with a new drug plan, all while lowering government revenues and adding the cost to the deficit as well. There were those two wars that were just added to the deficit as well, but who's counting?
On the political front, Republicans are painting the issue as Democrats raising taxes on small business, hurting job prospects. In reality, Democrats are actually only interested in letting the tax cuts on the wealthiest 3% of Americans expire while continuing the tax cuts for the shrinking middle class. The interesting thing is, that it appears that despite all of the cries from Republicans about Democratic spending on the stimulus package to stave off financial disaster, they themselves aren't actually interested in the deficit. The way the GOP has decided to make this an election issue belies their past positions of overspending and cutting taxes, which we know now is a toxic mix. Continuing to pay for tax breaks for the rich with borrowed money will not balance the budget at this point, especially for the richest Americans who have seen their fortunes rise while the middle class has been eroded.
To put a point on it, David Stockman who was a director of the Office of Management and Budget under President Ronald Regan had some harsh words for modern Republicans. He began bluntly stating, "If there were such a thing as Chapter 11 for politicians, the Republican push to extend the unaffordable Bush tax cuts, would amount to a bankruptcy filing." And it got worse from there.
He lays out what he calls the 'Four Deformations of the Apocalypse', and hammers Republicans for their blind faith in Friedman economics after seeing it bring about this latest economic collapse. As an example Stockman asserts, " The second unhappy change in the American economy has been the extraordinary growth of our public debt. In 1970 it was just 40 percent of gross domestic product, or about $425 billion. When it reaches $18 trillion, it will be 40 times greater than in 1970. This debt explosion has resulted not from big spending by the Democrats, but instead the Republican Party's embrace, about three decades ago, of the insidious doctrine that deficits don't matter if they result from tax cuts."
The piece is an excellent read and I highly recommend that you click the link and read it for yourself, because this fight is only going to get bigger.
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