Real World Consequences of GOP Policies - Part 3 (What Would Sarah Do?)

By Ennealogic

[In the first article of this series I offered that if the GOP had their way with smaller government, less regulation and lower taxes, we may end up in big trouble. Part One dealt with what happens when we reduce the size of government. Part Two talked about consequences of abolishing or neutering regulations and the regulatory agencies. Here is Part Three, discussing taxes, on the eve of final negotiations surrounding increasing the debt limit.]

Does anyone remember the great tax cut bill of 2001? Anyone? Bush the younger promoted and signed the bill very soon after he took office. It significantly reduced income and other taxes, largely for people who made a LOT of money each year.

"President George W. Bush signed into law Thursday (June 2001) the first major piece of legislation of his presidency, a $1.35 trillion tax cut over 10 years."

Certain Democrats voiced opposition at the time:

Democrats want tax relief that goes to every taxpayer," Gephardt said. "This bill does not do that." The minority leader said the middle class will not benefit enough from the tax cut and the wealthy will reap unfairly high benefits.

New Senate Majority Leader Tom Daschle, D-South Dakota, has said Congress will eventually be forced to revisit the tax cut, which he argues is too large, too generous to the rich and too expensive.

"I just know that at some point that reality is going to come crashing down on all of us and we're going to have to deal with it," Daschle said Wednesday.

Most of the tax cuts will expire in 2010. That prompted some House Republican leaders to announce Wednesday they will push legislation to make the cuts permanent.

How did this tax bill gather steam in the first place? Oh, right—we'd had a budget surplus for the previous three years in a row under President Clinton. The surplus was so great that we were even able (gasp) to pay down the debt some!

President Clinton announced Wednesday that the federal budget surplus for fiscal year 2000 amounted to at least $230 billion, making it the largest in U.S. history and topping last year's record surplus of $122.7 billion."This represents the largest one-year debt reduction in the history of the United States," Clinton said Wednesday morning. "Like our American athletes in Sydney, we've been breaking records and have come a long way." In June, the administration predicted the surplus would be $211 billion, and would increase by as much as $1 trillion over the next 10 years. Clinton also announced the federal government paid down the national debt by $223 billion this year, and by more than $360 billion since 1998, the largest debt reduction in U.S. history...

The federal budget surplus for fiscal year 1999 was 122.7 billion, and 69.2 billion for fiscal year 1998. Those back-to-back surpluses, the first since 1957, allowed the Treasury to pay down $138 billion in national debt.

It seemed only fitting, said Republicans, that we give some of that money back to the American people, so the tax cut bill was passed. Does anyone remember that the tax cuts were not supposed to be permanent, though? Let me say that again: the tax cut bill had a sunset provision that required them to be re-authorized in 2010. Some Democrats had the foresight to consider what we ought to do if there was no longer a surplus. It would no longer make sense to redistribute the bounty if there was no bounty. Were they right?

"Nearly 10 years ago today, on August 1, 2001, the Associated Press reported that the Treasury Department was tapping $51 billion of credit in order to pay for the budgetary cost of the first round of Bush tax cuts’ rebate checks."

Congress did re-authorize the cuts in 2010, in spite of the fact that we were borrowing to pay for them. The White House spun it like this: the bill also re-authorized an extension for unemployment and provided a few targeted cuts for working families, women and mothers. In spite of these must-have additions, the "Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010" still provided the wealthiest among us with a continuation of the greatest reduction in taxes for decades.

I don't really care for charts but here are a few that provide some perspective on the money that gets paid out of the Federal Government and the money that comes in.

Annual Federal Expenditures

The numbers show that defense spending amounts to the greatest non-offset expenditures in the 2009 national budget. The value of defense spending might be hard to measure in dollars, but I'd argue that the bigger the Pentagon budget, the larger the cost in human lives, and the greater the corruption in defense contracting. I remember when $2.3 TRILLION simply couldn't be accounted for. The news about this was during Rumsfeld's tenure as Defense Secretary, and strangely, the issue totally disappeared from public view when 9/11 happened, the day after the story broke.



If the GOP likes these elective wars… if they push for maintaining hundreds of bases around the globe… if they resist adding allowances for war dollars in the budget… then I respectfully suggest they pony up with some tax dollars to pay for what all this costs! Remember, there were no major conflicts during Clinton's years. There was no need for dramatically increasing the defense budget year after year. Thus, we could afford a few tax breaks here and there. But starting with Bush the younger we became embroiled in not one but two major theaters, Afghanistan and Iraq. Someone has to pay for the tanks and the bullets and the bombs and the airplanes. Leader Boehner, I'm looking at you. And you, Glenn Beck, and you, Sarah Palin, and you, Michelle Bachmann, and every other one of you "Cut Taxes" pundits and politicians.

So where does the Federal Government get income?

Where the Government gets money
(click to enlarge)

It's a little deceptive to say Social Security/Medicare spending is part of government expenses. SS is not an expense, per se, because payments are made out of a trust fund into which every working person contributes. My paycheck records a deduction every pay period for FICA. Basically, Social Security/Medicare funds are not a government expense needing coverage by income tax dollars because we already contribute to the fund balance separately.

(Granted, the system suffers strain when a bulge in the aging population peaks but over time this should even out. What happened to all the money all the baby boomers put in when times were good and everyone was younger and working? Surely there were extra funds then? Did someone nab some of it for other purposes? Why did we need to create a lockbox, according to Al Gore?)

If I am in debt, and I want to get out of debt, I get an extra job. I use the extra income to pay down the debt. My expenses are fairly fixed (just like the Federal Government's are) as long as I still want to have a roof over my head, lights in the house, gas for my aged car so I can get to work, and some food in the cupboard and frig. Do I stop eating? Or not refill my prescriptions? Or live in the dark, or let my mortgage company foreclose on me?

Those options are what the GOP is recommending for the majority of Americans. Instead of raising revenues by rescinding a 'good times tax cut' when needs are great, they want the middle class to sacrifice basic needs. Forget education, infrastructure, research, or assistance for the disadvantaged. But by all means, build jails, tanks, warplanes, and let private corporations act without accountability in every venue possible.

Just for giggles, here's a chart of how the US tax rates compare to other nations:

How the US compares in effective tax rates to the rest of the world in 2009

Yet, the GOP and Sarah Palin and their Fox-News ilk seem to think that we're being abused and stolen from. They are all just like children and I hear this refrain in my head, in a very screechy voice:

It's MY MONEY and I WANT IT NOW!

Just in case it isn't clear that the current crop of Teapublicans have a bad attitude concerning their fellow man and his needs, here is part of the syllabus from a Tea Party Summer School in Florida (emphasis mine):

The organization, which falls under the tea party umbrella, hopes to introduce kids ages 8 to 12 to principles that include "America is good," "I believe in God," and "I work hard for what I have and I will share it with who I want to. Government cannot force me to be charitable."

Where in all that is the Christian viewpoint, you know, the one that says, "I am my brother's keeper," or the one that says, "Give unto Caesar that which is Caesar's?" If there is a God and He is a Christian God, I have a feeling He won't care how much earthly treasure you accumulated while you lived, or how hard you fought to make sure there was no estate tax to preserve your worldly gains for your offspring. Just my guess, though.

From the Christian Bible, Mark 12: 14-17,

And they came and said to him, ‘Teacher, we know that you are sincere, and show deference to no one; for you do not regard people with partiality, but teach the way of God in accordance with truth. Is it lawful to pay taxes to the emperor, or not? Should we pay them, or should we not?’ But knowing their hypocrisy, he said to them, ‘Why are you putting me to the test? Bring me a denarius and let me see it.’ And they brought one. Then he said to them, ‘Whose head is this, and whose title?’ They answered, ‘The emperor’s.’ Jesus said to them, ‘Give to the emperor the things that are the emperor’s, and to God the things that are God’s.’ And they were utterly amazed at him.