Dogma Bites Man Over Taxes
Or, How The Trickle Down Theory Has Led To Massive Government Debts, A Bloated Class Of Super Rich And A Weakening Middle Class
A Tea Party protest in Raleigh, N.C. Image by Ivy Dawned.
By John Guzzon
Modern Times Magazine .com
April 19, 2011 — As the U.S. government goes broke and the economy continues to sputter, ‘conservative’ politicians in Washington, D.C. have acted boldly to spin the issue into an opportunity to get some leverage on ‘liberals’ or anyone else who wants to see a diminished defense budget, resumption of higher taxes on the wealthy without loopholes, and the preservation of Medicare and Social Security.
Call it a case of ‘dogma bites man,’ or, how the trickle down theory has led to massive government debts, a bloated class of super-rich and a weakening middle class.
The current republican proposals to extend the Bush tax cuts while ending Medicare as it has been for decades is just another example of the ‘conservative’ belief in trickle down economics. This theory has been proven to be false and counterproductive to virtually every economic system.
Even the Oracle of Omaha, Warren Buffet believes trickle-down is a flawed presumption.
“When you listen to tax-cut rhetoric, remember that giving one class of taxpayer a 'break' requires — now or down the line — that an equivalent burden be imposed on other parties. In other words, if I get a break, someone else pays. Government can't deliver a free lunch to the country as a whole," Buffet wrote in 2003.
But yet, the current Congressional majority as well as a majority of statehouses across the U.S. are being driven by it.
Take Arizona, for example. The statehouse has been ruled by ‘conservatives’ since there were conservatives in the democratic party — remember George Wallace, anyone? This state is dealing with a debt of epic proportions which led to selling off the state capitol and other buildings and turning down millions of federal matching funds just so they wouldn't have to pony up for certain programs like healthcare for the poor and unemployed.
Meanwhile, they gave corporations a huge tax break and considered many more.
Like Arizona, tax cut doctrine is almost solely to blame for the massive amount of government debt. President Bush II inherited a $2 trillion budget and ended with a 3.1 trillion budget which blossomed to $3.6 trillion in Obama’s first year thanks to the stimulus which was a Bush II deal as well, don’t forget.
It isn’t just that under Bush II spending nearly doubled — mainly in defense spending — it is also that revenues declined. First, from the tax cuts passed in 2003 and then when the economy tanked. As a result, we have even more debt than would have been the case.
Simply, an economy that cuts taxes and increases spending is unsustainable.
"Prior to the 1980s, conservatives were fiscally conservative— that is, they were unwilling to spend more than they collected in taxes. But Reaganomics introduced the idea that virtually any tax cut would so stimulate growth that the government would end up taking in more revenue in the end (the so-called Laffer curve). In fact, the traditional view was correct: if you cut taxes without cutting spending, you end up with a damaging deficit. Thus the Reagan tax cuts of the 1980s produced a big deficit; the Clinton tax increases of the 1990s produced a surplus; and the Bush tax cuts of the early 21st century produced an even larger deficit,” said Francis Fukuyama a senior fellow at Stanford University who worked for Reagan and now supports Obama.
Oh, so he Laffer curve should be referred to as the Laugher Curve? Not totally.
Those who think tax cuts are always a good idea need to remember to breathe after reading the next paragraph.
This infamous curve is designed to show when tax cuts would benefit the economy. The basic formulation of such an idea is that tax cuts can harm the economy. Tax cuts are not always a good thing. Supply-side economists have also abandoned the idea that tax cuts will benefit the economy after numerous models have shown that to not be the case. It is a known and dead issue.
The Bush tax cuts need to expire because the ‘old’ rate is what is best for our economy. The Laffer curve and supply side economics say so.
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