Thursday, September 30, 2010

The Deficit Timeline

"Tax cuts pay for themselves."

The problem is simply, they haven't and they won't.  The failed notion is that if taxes are low, this will spur long-term economic growth, because more people will have more money to invest with.  So, why are we running deficits, now?  Taxes are lower now than they were in the 90's, a period of economic growth and stability, not to mention budget surpluses.  In fact, when you look back over the past century, you'd see that the top tax rate is currently less than a third of its highest peak.

The point I'd like to make is that lowering tax rates doesn't raise tax revenue.  They simply don't, "pay for themselves".  When you cut taxes, you are going to have less money to operate government services.  President G.W. Bush offered tax cuts while at the same time going to war in two theaters.  His instructions to Americans were, "Keep shopping."  So, while U.S. soldiers were fighting and dying, American citizens were told it's better that you buy that new flat-screen TV, rather than pay for wheelchairs for returning veterans.

Taxes are gathered to pay for the stuff government does, all of it.  When "We" go to war, "We" have to pay for it, or "We" go into debt.  When you reduce the tax rate, you must reduce spending.  If you don't, you will go into debt.  This was true yesterday, it is true today, and it will be true tomorrow.

The economy is not going to solve or otherwise fix the deficit.  It simply doesn't work that way.  We must raise taxes to pay for our debt.


We must cut spending.

As Americans, we now have a decision to make, "Do we want to fund our current activities, or not?"  After which, we will be tasked with doing without for a while.  We have lived beyond our tax income, and there's a bill due now.  We have to do with less income or less government.  Now before you leap to the later, I'd ask you not to weakening our Union.  Taxes are gathered for all of us, and they fund the infrastructure upon which we exist.  So should we allow our roads, bridges, and social safety nets to collapse, or should we raise the revenues to fully fund their restoration?

In whichever case, there must be a reckoning with the direct correlation between the tax rate, tax revenues, and spending.

No comments:

Post a Comment