Historically, tough economic times have bolstered the support for a larger federal government, however faced with large deficits many countries are beginning to weigh the the size of the government against the needs and benefits of social welfare policies. Here in America, we have seen vocal groups such as the tea party condemn what they see as wasteful spending and the creation of a debt that will cripple the country for generations. However, as this political and ideological debate deepens, it seems that the nations top law makers are forgetting the most important thing, you and I, the average citizen.
To begin to understand how the country got to where it is today, one must go back to when conservative tax cutters ran Washington. Under George Bush and Reagan, tax cuts aimed at the most wealthy and well off were enacted that brought this country to its economic knees, metaphorically speaking. However, the Reagen that existed differs widely from the mythic Reagen that the Republicans under Bush and current Republicans and deficit hawks worship. In fact the true Reagan that existed would be far removed from the tax cutting, tea partying, conservatives that we have come to know today. After enacting tax cuts for the most wealthy it became apparent that the budget deficit was growing, and Reagan began a series of tax increases, starting in 1982 and again in 83 and 84. Unlike todays conservatives who argue that taxes on the rich will further hurt the country in the middle of a recession, Reagen engaged in tax hikes in the midst of a recession under complaints that growing military spending and numerous loopholes for the rich were causing the recession to grow.
Yet today, in midst of the worst economic downturn since the great depression, deficit hawks, who claim to love Reagan but will not learn from him, are going down the same path. They are willing to cut taxes for the rich in the middle of a recession, despite knowing that it has not worked in the past.
Under same misguided views of supply-side economics, the Bush administration enacted several tax cuts between 2001 and 2002 which turned a record surplus into record deficits. Furthermore, just like the Reagan taxes, the Bush taxes promised to be just as regressive, switching the burden from the wealthy to the middle class, the backbone of a strong economy and a strong nation. In 2003, the federal tax revenue fell to its lowest level since 1943. Despite the past evidence that keeping tax cuts in the middle of a recession has failed to improve the economy, current so called “deficit hawks” continue to fight for the Bush tax cuts for the wealthy, despite the projection that they will add two trillion to the debt.
However, the right argues that raising the taxes on the rich is actually hurting the middle class, as the rich are the job creating class. However, to create jobs there needs to be a need to create jobs, and an excess amount of cash for the wealthy will not provide it. On average, tax cuts aimed at the most wealthy will only add a mere six percent to the economy. In order to create a need for jobs, you must provide money for those who need it the most and will create the most need for jobs, the middle class and lower classes.
The house has just passed a spending bill of 34 billion dollars to continue the war efforts in Iraq and Afghanistan and received heavy support from the the GOP, many of whom claim to be deficit hawks. If they could swallow such a pill for wars that are increasingly unpopular, why can they not swallow a similar pill to extend unemployment benefits. For every dollar of unemployment extended, the GDP grows by one dollar and seventy three cents. While keeping taxes low for the rich and wealthy adds only a mere fifty-nine cents to the GDP. In fact, under the Clinton administration, taxes on the highest tax bracket were raised from thirty-one to thirty-nine percent in 1993, and against all the warnings of the supply-siders and the GOP, the economy boomed and there was no shortage of people trying to become rich. This does not prove that raising the taxes on the rich will cure the deficit and economic woes, but it puts supply side scare tactics in question.
Current tax cutters and GOP members seem to want to point the blame for the deficit problem anywhere but at their own policies. Yet a recent study by the Center on Budget and Policy (CBP) puts the blame at no one else but the GOP and Bush tax cutters. Combined with the economic downturn, the Bush era tax cutting policies along with the Iraq and Afghanistan war pushed the debt skyward. Without such policies, the current debt would be measured at around .6 trillion, rather nearly 1.4 trillion. Between 2001 and 2006, as the pie chart explains, more than half of all the federal debt incurred came from bush era tax cuts. An additional 33 percent came from national defense and security spending, while only 10 percent came from social welfare policies such as Medicare and Social Security. Throughout 2009, 500 billion dollars of the debt had been contributed to by bush era policies, including the tax cuts and the two wars. It is impossible to put the entire blame for the current deficit on current policies, as the tax cutters and the GOP would like. Any budget deficit estimate must also take into account the bush era policies (tax cuts for the wealthy, two major wars), which if left unchanged will be responsible for adding nearly seven trillion to the deficit by 2019. The message is clear from the CBP, the federal budget would be roughly much better off without the policies of the GOP and the tax cutters.
It seems to me that the evidence clearly explains it all. If so called deficit hawks want to trim back the budget and reduce national debt, they should be looking into curbing their own policies, not pointing fingers at social welfare policies.
Joseph Schumpeter wrote that people often make illogical or irrational decisions in the short term, and only make good decisions in the long term if they are not duped by elites into thinking in a certain way. It appears here that Americans have made a foolish short term decision to continue the bush tax cuts, despite a wealth of information against it from the CBO to the CBP, and have been tricked into thinking they have made an investment into the future. These tax cuts were foolish in 1980’s, they were foolish in 2001-2002 and they were even more foolish now.