Democrats, economists, financial experts, even a former Bush economic adviser, have all sounded the alarm on the danger of the failed Republican economic policies of ignoring the deficit when cutting taxes for the rich, by refusing to cut spending in other areas to pay for them. Republicans have amnesia when it comes to their failed supply-side economics policies of the Reagan and Bush administrations. What is the GOP plan, if they win the House majority in the November elections? Cut taxes for the rich. How will they be paid for? Tax cuts for the wealthy pay for themselves, insist Republicans. Outside of the GOP rabbit hole, in the reality-based world, tax cuts DO NOT pay for themselves, they add to the deficit.
Martin Wolf, associate editor of the UK Financial Times, penned a provocative piece condemning the failed supply-side economic policies of Republicans, as a “dangerous,” and “irresponsible and unsustainable” calculated political scam that promises voters a “free lunch,” while destroying the American economy. Wolf is fearful that if the GOP regains power in the mid-term elections, they will finish the job that George W. Bush started and nearly succeeded at. And take America into insolvency, dragging down the rest of the world with us.
Some key takeaways from Wolf’s apt doomsday piece:
- Republican supply-side economic policies are about to take us over a cliff and there are no longer sane voices in the GOP to stop it. “Republicans have no interest in doing anything sensible,” writes Wolf. And when the Democrats under the Clinton administration created a healthy sound surplus, the Republicans pissed it away as soon as they regained power.
- Republicans are hypocritical when it comes to their deficit concerns. “But no, it is not deficits themselves that worry Republicans, but rather how they are caused: deficits caused by tax cuts are fine; but spending increases brought in by Democrats are diabolical, unless on the military,” says Wolf.
- The stimulus bill was too small to have a true stimulative effect on our economy. And the U.S. desperately needs more stimulus, NOT more tax cuts. “In any case, the stimulus was certainly too small, not too large.” Wolf concludes that “across-the-board tax cuts are an extremely inefficient way of providing it.”
- Republican tax-cutting policies have developed into a familiar scam. They cut taxes and the deficit explodes. Republicans then start screeching they need to cut social welfare programs to reduce the deficit, as evidenced by the recent fight over paying for the extension of emergency unemployment benefits. Suddenly, the deficit matters to the GOP when it involves spending money on poor people. And then they cut taxes some more. Supply-side economics is based on a vicious and destructive rationale.
Writes Wolf, “The political genius of this idea is evident. Supply-side economics transformed Republicans from a minority party into a majority party. It allowed them to promise lower taxes, lower deficits and, in effect, unchanged spending. Why should people not like this combination? Who does not like a free lunch?” [...]
“Finally, if deficits did not, in fact, disappear, conservatives could fall back on the “starve the beast” theory: deficits would create a fiscal crisis that would force the government to cut spending and even destroy the hated welfare state.”
What does this say for the future of America’s economy? Wolf envisions an eventual catastrophe, and he may be right. Paul Krugman,The New York Times Pulitzer Prize-wining economist, said of Wolf’s piece:
“Wolf’s argument and main points are similar to those I made in a recent column; that’s not a criticism, because we need more people saying this.Martin ends on a deeply pessimistic note. I wish I could disagree.”
Wolf concludes, the U.S. economy will continue to deteriorate, as long as Republicans continue to insist tax cuts are self-financing.
“Finally, with one party indifferent to deficits, provided they are brought about by tax cuts, and the other party relatively fiscally responsible (well, everything is relative, after all), but opposed to spending cuts on core programs, US fiscal policy is paralyzed. I may think the policies of the UK government dangerously austere, but at least it can act.”
Perhaps the best takeaway from Wolf’s condemnation of GOP policies, comes in a comment defending himself against attacks that he is a crazy Socialist. He responds by daring Republicans to be honest with their constituents about their tax-cutting, small government policies, by actually admitting what programs they will cut to pay for tax cuts for the rich:
“A number of commentators assume that I am a European socialist (not true) and am attacking the Republicans for this reason (also not true). I believe Americans are entitled to make their own choices. But then make it an honest choice. Let the Republicans stand at the next election on the following principles: abolition of Medicare (and, of course, the recent health care bill); abolition of Social Security; abolition of federal assistance to the states; and radical tax cuts. I think that would be an honest program. I strongly suspect it would be politically suicidal. But promising the tax cuts without specifying the spending cuts is dishonest and dishonorable. Would paying for the promises the US has made to its citizens destroy the economy? No, in my view and certainly not as much as not paying would.”
Yes, indeed. When you hear Republican lawmakers promoting unpaid for tax cuts, ask them point blank what programs they will eliminate to reduce the deficit. So far, the GOP is unwilling to answer that question.
Bold-green emphasis mine
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