Tax Cut Madness

Nearly ten years ago, President Bush delivered on his campaign pledge to cut income taxes. One large reason for this pledge was that the federal government was forecast to run a budget surplus in a few years. President Bush used the logic that the government was in a sense paying back over-collection of taxes.

Of course, the flaw in his argument was that this assumption was made BEFORE the nation embarked in the Iraq and Afghanistan Wars. In 2001 when this was first introduced, nobody knew of the trillions of dollars the United States would be investing in foreign adventures.

To gain passage of these tax cuts, that in fact were paying nothing back, the Bush Administration included a sunset of the tax cuts in 2011. This was the price paid with a wink and a nod to the increase to the deficit the tax cuts might cause.

Of course, Bush assured everyone who would listen that the economy would grow and make up the difference and the tax cuts would somehow be revenue neutral. This followed the conservative philosophy that tax cuts stimulate economic growth enough to actually grow tax revenues. The stark fact that this was empirically unproven, did not concern the Republicans. This is no evidence that tax cuts grow the economy!

Two things ruined this forecast: 1. It was based on a lie, the federal budget was never balanced; in fact the budget balance was forecast years in the future. 2. The Wars and the 2008 Recession/Depression caused the deficit to grow to historic levels.

Now, as 2011 approaches, the Republicans are breaking their pledge with the American People: that the tax cuts would sunset if there were negative implications for the federal budget. In an act of breathtaking irresponsibility, Republicans are demanding that all the tax cuts continue, with no admission that the defict will be dramatically increased.

And, the sunsetting of the tax cuts are now being cleverly called a “tax increase” by the Republicans who passed them almost 10 years ago, with the promise that they would sunset if the country was in the economic shape we find ourselve in today. How in the world is the sunset of a tax cut a tax increase? The same people, in most cases, who voted for the sunset part of the tax cuts, now call sunsetting a new tax increase. Incredible!

But, we must remind ourselves, they just recently massively fooled the American People into believing that the economy is all President Obama and the Democrats’ fault. They also campaigned on the danger of the federal deficit to the economy, but then turned right around and broke their sunset pledge.

This is very troubling. This proves that the Republicans really believe they can fool the American People ALL the time.

Their boldness was just demonstrated again, with Senator McConnell going public with a vow to fillibuster everything until tax cuts are continued for all taxpayers, even millionaires. Extending the tax cuts for the rich is very unpopular with most voters. But Republicans have learned that the American People, at least most of them, are tone deaf relative to economic and political realities.

So, they do it, because they can get away with it.

The only good thing is that history will judge this madness, and so will economic reality. Expediency rewards in the short term, but loses long term. The implications our democracy are not good.