Thursday, March 4, 2021
paid advertisement
Home Tags Deficit Reduction

Tag: Deficit Reduction

The Devil in the Details

So, is this dysfunctional Congress actually trying to deal with the second structural deficit in thirty years engineered by a Republican administration? Thirty or so years ago, Ronald Reagan came into office during a deep recession and pushed through huge tax cuts that ultimately gave us the first such deficit. That one didn't get fixed until the Clinton administration. In 2001 Republican George W. Bush created the same situation, using a fairly mild recession to undo the tax reforms of the Clinton era, thus wiping out any hope of continuing surpluses that were meant to prepare for the retirement and medical costs of the Baby Boomers.

We wouldn't even have this second structural deficit if George W. Bush had not given us those huge tax cuts and followed that with two wars that were unpaid for, a Medicare prescription benefit that was unpaid for, and the creation of a new cabinet department, Homeland Security, that was unpaid for. In fact, the easiest way to solve our problem, some say, is to allow all the Bush tax rates to expire in 2013, end both wars, and find a way to pay for that Medicare benefit, while reining in health care costs.

Structural deficits exist when the budget of a government cannot reach balance, even if the economy is operating at full potential.  Right now, the huge deficits we are piling up aren't all  that bad because interest rates are very low and acting too fast will harm the slow recovery; however, that situation won't last much longer. Coming to terms with the federal structural deficit has to be done fairly soon for our economic health.

The question is whether Sen. Mark Warner and the so-called "Gang of Six" have a plan that will work without making the working and middle classes bear all the burden of undoing the Bush excess. It appears that they basically took last year's presidential deficit commission report and made that the plan they will push. One would think that they at least do concede that tax revenues have to be raised at the same time as expenditures must be cut. However, the fine print in their short outline makes that unclear.  The most heated arguments are sure to come from deciding what revenue is raised and what programs get cut. Since the "Gang of Six" released just a three-page outline of their proposal, we are left to wonder what devils lurk in the details. In that summary ,  I found a couple of obvious hidden devils:

Eugene Robinson is an absolute must read

In his Friday column titled A little more revenue could go a long way.   Perhaps you can get a sense of where he is going from the very beginning:  
Do progressives care about reducing the national debt? Of course they do, no matter what the White House might believe.

While acknowledging all of the legitimate worries about the financial direction of this country, ultimately Robinson is coming down on the side of the approach proposed by the Progressive Caucus.  As he notes about confronting the problems we face,

The way to avoid this dystopian future is to bring spending and revenue more into balance. Yes, there will be some pain and sacrifice. But it is not necessary - nor is it wise - to heap a disproportionate share of the burden onto the backs of the poor, the elderly and the battered middle class.

What is the alternative? Well, we could begin by recognizing that while spending is too great, in historical terms, revenue is far too meager. We ought to be taxing and spending at roughly 20 percent of GDP, which means that a sensible, equitable, long-term program of debt reduction ought to include spending cuts and revenue increases in roughly equal measure.

There is much more, and I am pretty much at the limit of fair use already.  

You should read, and pass on, his column.

But please keep reading.

Where “No Taxes” Is Taking Us

Remember what TEA Party stands for: "Taxed Enough Already," as if the members, self-righteous in their anger, have been taxed by evil government into personal penury, and they are "mad as hell, and not going to take it any more!" Such sentiments are the natural outcome of a 50+-year-long campaign by libertarians and disgruntled Hobbes-oriented conservatives to halt and roll back the social programs of John Locke-oriented liberals, i.e., meaning in general terms, that the misanthropes of the so-called right wing want to abolish the New Deal and most of the twentieth century's development of the middle class.

What was a small stone rattling down the slope has turned into a roaring avalanche, accreting additional objectives as it grows, so that now it is not merely "entitlements" and "welfare" which are on the chopping block, it is the primacy of the federal government itself, including such things as the constitutionality of an income tax to fund it, and federal protection of civil rights, as well as, at the other end of the scale, the power of local jurisdictions to provide public services like roads, utilities, police and fire protection, even education. The wrecking crew has really and truly come to a  town near you.