Quick. What’s the biggest drain on our federal budget?Â Two wars off the books? TARP and other federal bailouts? The stimulus?Â According to the Congressional Budget Office (CBO), the answer can be found in the Bush Tax Cuts which benefitted the wealthiest 1 percent of all Americans and proved anemic at job growth and economic stimulus.Â
If we had a Congressman with an accounting background, you’d think he’d be all over that.Â But wait, we do and he’s not.Â Which calls into question his accounting capabilities..it is a green eyeshade or a green blindfold?
This weekend in the New York Times, economist David Stockman wrote the following:
“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. The nationâ€™s public debt â€” if honestly reckoned to include municipal bonds and the $7 trillion of new deficits baked into the cake through 2015 â€” will soon reach $18 trillion. Thatâ€™s a Greece-scale 120 percent of gross domestic product, and fairly screams out for austerity and sacrifice. It is therefore unseemly for the Senate minority leader, Mitch McConnell, to insist that the nationâ€™s wealthiest taxpayers be spared even a three-percentage-point rate increase.
More fundamentally, Mr. McConnellâ€™s stand puts the lie to the Republican pretense that its new monetarist and supply-side doctrines are rooted in its traditional financial philosophy. Republicans used to believe that prosperity depended upon the regular balancing of accounts â€” in government, in international trade, on the ledgers of central banks and in the financial affairs of private households and businesses, too. But the new catechism, as practiced by Republican policymakers for decades now, has amounted to little more than money printing and deficit finance â€” vulgar Keynesianism robed in the ideological vestments of the prosperous classes.
This approach has not simply made a mockery of traditional party ideals. It has also led to the serial financial bubbles and Wall Street depredations that have crippled our economy. More specifically, the new policy doctrines have caused four great deformations of the national economy, and modern Republicans have turned a blind eye to each one.”
Stockman continued: “Having lived beyond our means for decades by borrowing heavily from abroad, we have steadily sent jobs and production offshore. In the past decade, the number of high-value jobs in goods production and in service categories like trade, transportation, information technology and the professions has shrunk by 12 percent, to 68 million from 77 million. The only reason we have not experienced a severe reduction in nonfarm payrolls since 2000 is that there has been a gain in low-paying, often part-time positions in places like bars, hotels and nursing homes.
It is not surprising, then, that during the last bubble (from 2002 to 2006) the top 1 percent of Americans â€” paid mainly from the Wall Street casino â€” received two-thirds of the gain in national income, while the bottom 90 percent â€” mainly dependent on Main Streetâ€™s shrinking economy â€” got only 12 percent. This growing wealth gap is not the marketâ€™s fault. Itâ€™s the decaying fruit of bad economic policy.
The day of national reckoning has arrived. We will not have a conventional business recovery now, but rather a long hangover of debt liquidation and downsizing â€” as suggested by last weekâ€™s news that the national economy grew at an anemic annual rate of 2.4 percent in the second quarter. Under these circumstances, itâ€™s a pity that the modern Republican Party offers the American people an irrelevant platform of recycled Keynesianism when the old approach â€” balanced budgets, sound money and financial discipline â€” is needed more than ever.”
Former Federal Reserve chairman Alan Greenspan also chimed in on the economic disaster that awaits if the Bush tax cuits are extended.
“Former Fed Chairman Alan Greenspan said that the push by congressional Republicans to extend the Bush tax cuts without offsetting the costs elsewhere could end up being “disastrous” for the economy.
In an interview on NBC’s “Meet the Press,” Greenspan expressed his disagreement with the conservative argument that tax cuts essentially pay for themselves by generating revenue and productivity among recipients.
“They do not,” said Greenspan.
“I’m very much in favor of tax cuts but not with borrowed money and the problem that we have gotten into in recent years is spending programs with borrowed money, tax cuts with borrowed money,” he said. “And at the end of the day that proves disastrous. My view is I don’t think we can play subtle policy here.”
The comments from the former Fed chief were an elaboration of a position he outlined in an interview earlier in the week. Speaking with PBS’ Judy Woodruff, Greenspan expressed his opposition to passing legislation that would hold tax rates steady (under law the tax cuts Bush passed ten years ago are going to expire, thereby bringing rates back to Clinton-era levels). President Obama has pledged to continue the tax breaks for those individuals making under $200,000 and those families earning less than $250,000.”
I’ve seen framing from Republicans that not renewing the Bush tax cuts makes it a Democratic tax increase, and this simply isn’t true.Â If anything, by putting an expiration date on the tax cuts, it’s a Republican measure.Â The middle class tax cuts passed by the Obama administration and the Democratic-controlled Congress will protect taxpayers (all but the upper 2 percent of the wealthiest taxpayers).Â
But then again, maybe our “Green Eyeshade” blogger/Congressman could apply some actual accounting principles to the Bush era tax cuts.