Sunday, July 24, 2011
Bush Tax Cuts Created a huge Imbalance: The Consequences of Borrow and Spend Economics
When George W Bush became President in 2001 he an inherited a projected Budget Surplus of 1T$ over ten years including 100B$ a bank for his first year. And a National Debt of around 4T$ and we were talking about actually paying down the debt and deficit "too fast". Probably the first time we've ever had that debate in our history. President Bush left office eight years later with a Budget Deficit of 1T$ and a National Debt of 10T$. President Bush did have a couple of recessions in his Presidency, 2001-02 and you can make a case that he inherited the first one. Because the economy did start to slow down in 2000 but the "Great Recession" of 2008-09, clearly happened on his watch and he didn't fix the problem and you can argue that he made the problem worst with his own Fiscal Policy which I'll get to in a minute. You have to go back to the 1930s with FDR to find a President that served at least two terms that had an economy that did as bad as President George W Bush, seventy years. Which will be a big part of President Bush's Presidential Legacy, along with the Wars in Afghanistan and Iraq. But how did he put this record together, during President Bush's tenure he had a Republican Congress for four years. Democrats controlled the Senate for the first two years and a Republican House for six years. During this period the Bush Administration decided that they could get two 1T$ Tax Cuts through without paying for them, Supply Side Economics. The two wars without paying for them, 3T$ to this point, the first time we've ever borrowed all the money to pay for wars. And a 500B$ Medicare Prescription Drug Benefit, again all borrowed money. Howard Dean when he was running for the Democratic Nomination for President and when he served as Chairman of the Democratic Party. Dubbed the Bush Fiscal Policy Borrow and Spend Economics. You figure out what you want to do, how much it will cost and then borrow all the money to pay for it. Instead of having a list of priorities, this is what we need to do, this is the money we have. Lets figure out how to make it work the best and if we don't have enough money. We cut in other areas or we raise the revenue, that would be called PAYGO, you pay for what you spend.
As much as the Bush Tax Cuts have failed ten years later, because of how bad the economy is right now. The last thing we should be doing right now is passing Middle Class Tax Hikes on people who can't afford them and are struggling just to get by. And one of the last things we should be doing is adding top our debt and deficit situation as well. So what we should do is raise taxes on people who can afford them, use that revenue to help pay down the debt and deficit. Reform the Federal Government entitlements, defense and other places. Cut back in areas we don't need to spend as much. Defense, agriculture, Tax Subsidy's and Loopholes and invest in the economy like in infrastructure and energy. But do it in a way that doesn't add to our debt and deficit and start paying for everything that the Federal Government does going forward, including defense and Natural Disaster Relief.
Click on the link of the blog to see a video of the Ed Shultz Show on the Bush Tax Cuts.