Sunday, October 14, 2012
GOP Policies Won't Fix The Huge Deficit
One of the main Republican arguments in this campaign is that the deficit is too large. I won't argue with that. It is too large. For the fourth year in a row, the deficit will top $1 trillion. The only good things that can be said is that it is slowly shrinking (down $207 billion from the previous year) and the government still has no problem getting the money it needs. But the deficit needs to be reduced substantially.
The Republicans say they have a solution. That solution is to drastically cut social programs, give the rich (and corporations) massive new tax cuts, and spend more money on the already bloated military budget. It doesn't take a genius to know that kind of plan just won't work. It will just make things worse. First, you could eliminate all of the social programs completely and it still wouldn't make much of a dent in the deficit -- especially if you raise military spending and cut revenues with new tax cuts for the rich.
The military budget is not only much larger than the budget for social programs, but it is filled with items that could be cut without hurting this country's defense (look to the military-industrial complex here, not to soldier's needs). We spend nearly half of the money spent on military budgets for the entire world (more than the next fifteen countries combined). We could cut the military budget in half and still be spending more than any other country. There's a lot of fat there that could be cut -- and it makes no sense at all to increase it even more.
As for the new tax cuts proposed by Ryan/Romney and their GOP cohorts, the arithmetic just doesn't add up. They say they can cut taxes by 20% and still not add to the deficit or raise taxes on the middle class. Even sensible Republicans don't believe that. Here is what Mark Zandi, McCain's economic advisor and current Chief Economist at Moody's, has to say about it:
Yeah, I think the Tax Policy Center study is the definitive study. They’re non-partisan, they’re very good. They say given the numbers that they’ve been provided by the Romney campaign, no, it will not add up. Now, the Romney campaign could adjust their plan. They could say okay I’m not going to lower tax rates as much as I’m saying right now and they could make the arithmetic work. But under the current plan, with the current numbers, no it doesn’t. I’ll say one other thing, though. I think it is important that we do focus on the so-called tax expenditures in the tax code. Those are the deductions, and credits, and loopholes in the code. We need to reduce those, because if we do we’re going to make the tax system fairer, easier to understand and ultimately lead to stronger growth. So that’s the right place to focus. But, no, the arithmetic doesn’t work as it is right now.
There is a better way to cut the deficit. It would first involve raising taxes on the rich (at least get rid of the Bush tax cuts), tax all income as earned income (eliminating the special 15% tax rate for investment income), make substantial cuts to the military budget (larger than the tiny cut being debated now), and pass a substantial jobs program to get far more people back to work so they can also start paying taxes (even if we have to borrow some more to do it), and strengthen unions & raise the minimum wage (these two measures would jump start the economy by putting more money in the hands of the working and middle classes, who would spend it).
If all of that was done, we could reduce the deficit and put the country back on the road to a healthy economy. It would not happen overnight, but it would happen. As for the Republican plan, that would do nothing but fatten the bank accounts of the rich and the corporations (neither of which need it, since they are already making record amounts of income and profits). The Republicans caused the deficit, and their plan would just make it (and our economy) worse.