Wednesday, December 15, 2010

I just don't know anymore

It looks like Congress is on board with the two-year extension of the Bush tax cuts.  As I understand it, this will cost upwards of $800 billion in foregone tax revenue.   Even if I’m wrong by a hundred billion or so, that’s hundreds of billions more than the net cost of the original TARP bailout, you know, AIG, GM, Wall Street and so on.

Isn’t that the program that the Republicans ran against (even though it started with the Bush Administration)?

Everything I’m reading says the GOP and the Dems are just going to yell over the other guys heads leading up to the 2012 elections and no one is going to cut any meaningful spending.

Maybe it’s just me; but, if everyone agrees that we can’t continue what are crushing deficits which will only cascade if spending isn’t cut, what the hell are they doing increasing the deficit? 

W and Congress (and yes there were and are Dems in it) cut taxes with the idea that it would grow the economy which would result in more taxes being paid, reducing the deficit.  How did that work out, as the good Sarah would ask?

I’m too lazy to go find out how GDP, federal spending and tax revenue have changed but here’s the net result, the gross debt according to the Treasury Department:

09/30/2010 13,561,623,030,891.79
09/30/2009 11,909,829,003,511.75
09/30/2008 10,024,724,896,912.49
09/30/2007 9,007,653,372,262.48
09/30/2006 8,506,973,899,215.23
09/30/2005 7,932,709,661,723.50
09/30/2004 7,379,052,696,330.32
09/30/2003 6,783,231,062,743.62
09/30/2002 6,228,235,965,597.16
09/30/2001 5,807,463,412,200.06
09/30/2000 5,674,178,209,886.86

The last decade of government cost about $8 trillion more than it took in.  And we’re going to add 10% to that in the next day or two.  Then we’ll “talk” about cutting spending.  Of course, defense spending, Social Security, Medicare, Medicaid and all the other big ticket items are off the table, especially while our leaders are angling for political advantage. 

As Sarah would say, how ya think that’s going to work out?

I’d say we’re screwed.  We’ve met the enemy, the enemy is us – we want and we elect people that give us what we want.


J said...

Your key phrase "forgone tax revenue" is indicative of the democrat view that all money earned belongs to the government for spending and redistribution and any amount we are allowed to keep is just due to their generosity but can be seized at any time (especially when we die).

Please note that the tax rates being extended are the only rates that a half a generation of people that entered the work force since 2001 have ever paid. For them particularly (and all of us) not extending the rates would not be "just returning to the previous rates" it would be an increase!!

The logic of the democrats is intriguing. They claim that the rates should not be extended for the "rich" because the government needs the money (oh and I suppose to punish the evil rich as well). So what did they do when they didn't have their way? They load up the extension agreement with even more spending! (unemployment welfare, pet project subsidies like ethanol etc)

Kind of like a spouse saying "well dear, since you didn't get a raise I'm going to buy more stuff on the credit card".

No wonder we are in such a mess.

Dave said...

Hey J. Thanks for the comment, responding allows me to ignore the four lease agreements staring at me from the surface of the desk.

I thought about using another description and none seemed good; though, I don't think the phrase is really owned by the Dems. I don't have any real disagreement with most of what you write. Other than you ascribing all the blame to the Dems.

I fully expect both parties to do not much of anything substantive about the economy over the next two years and point the finger at each other.

Well, that didn't take long enough - back to the leases.

The Curmudgeon said...

I also don't know why allowing the Bush tax cuts to expire would be anything other than a tax hike. If we didn't pay x during the last decade, but now we must pay x and x is more than what we were paying, how is that NOT an increase?

That said, though, this "compromise" has to be the worst of all possible worlds: The Republicans got to keep the lower tax rates, the Democrats got to extend unemployment and other "new stimulus" plans they favored and everyone will take credit for lowering the payroll tax next year (which, in the short term, I'll probably appreciate, as will you).

But this is not exactly a Profile in Courage.

Quite the opposite.

Was it de Toqueville who said that, in a democracy, people get the government we deserve? Yikes!