Tuesday, November 15, 2005

These budget cuts are not deficit reduction, they are to fund more tax cuts and raise the deficit some more

We have been reading daily about the mighty struggles among the House GOP to figure out a way to cut $50 billion from the budget.

In fact, in light of the looming budget deficit crisis (Today's USA Today, while off on some specifics, was pretty much on target in predicting that our continued growing deficits would sooner or later implode the economy if something isn't done), reigning in spending does make some sense.

However, this is a classical 'bait and switch' routine. The Senate voted to cut $39 billion, and the house is looking at the $50 billion cut, all from social services (thereby targetting in many cases those programs which have already seen deep cuts). Yet none of the cuts involve corporate welfare. NONE. I blogged yesterday on the prescription drug bill which is primarily designed to fatten pharmaceutical companies with our taxes, but as we have seen in the case of, for example, the recent energy bill and 'extras' packed into the anti-terrorism bill, there are many, many companies which are getting pretty full at the public trough. But not a word about cutting any of that.

And what is more, the GOP proposes to follow this sequence of cuts (amounting to about 4% of the projected deficit) with $70 billion in additional tax cuts. You do the math. Obviously cutting a smaller amount that than has nothing to do with the deficit and everything to do with ideology and politics.

Of course, when Clinton was the President and the economy was booming and we had a surplus, Republicans proposed tax cuts as a way to let people share in the wealth. When it was flat, they proposed them to jump start the economy. A few years later, it is in a somewhat volatile recovery (which it was due for anyway) and they are proposing that tax cuts will stabilize the economy. In other words, Republicans have one solution for everything, and they can change their argument to fit whatever the conditions are at the time.


Barbi said...

Why can the rich pay the same tax rate I do?

Eli Blake said...


That is what they propose to do, via a 'flat tax.' The problems with this are that 1) a progressive tax system takes into account that there are some items, like food, that people absolutely have to have (and in my opinion a subsistence level income that will only buy these necessities ought not be taxed at all) while when people have a bit more money, they are past paying for subsistence. So, if we subract that out from everyone, then by definition, you have a progressive tax system since the subsistence level stuff (food and a roof) is a higher percentage of what a poor person makes than a wealthy person. and-- 2) a 'flat tax' where it has been tried was never flat, because there were still people who would write into it loopholes to lower their tax. And if we had a flat tax, do you honestly think for a moment, with the system being as it is in America, that these kinds of loopholes wouldn't start appearing almost as soon as the ink was dry on the original bill? So, the people with access to power (largely the rich) would end up paying lower taxes than the rest of us (which they do in many cases anyway, but at least a progressive system makes it a little harder for them to get away with it).

Chris said...

Looks like the bill has been killed because all the pork has been stripped.

Barbi said...

Good points, Eli. My question was sort of tongue in cheek. I don't know if I like the phrase
"progressive tax" anyway, tho'. I think it should be a "gradually increasing" tax...based on income levels. Sort of like my property taxes being lower that someone with a million dollar home. While I don't mind paying a FAIR share as a "middle-class" person, I should not have to pay a higher ratio in a percentage-on-income tax rate than someone who is "upper-class income" and I should pay a larger percentage ratio than one whose income is much less, and considering the cost of living expenses. It's just that I am against the highest upper-incomes not paying a fairer share. Loopholes should be shut off, (except perhaps for charitable donations?). And I think excessive windfall profits should be taxed, too (especially if there is no reinvestment into the business productivity, like the oil companies?). I mean, how much money IS enough? (I know, stupid question!) What would you suggest for a better, fairer tax system?