Wednesday, July 13, 2011

Ezra Klein Provides a History Lesson

All this yammering about deficits and "the debt" in Washington is laughable. As Ezra Klein points out in his blog at the Washington Post...
We have a taxing problem, not just a spending problem

The Bush tax cuts were not supposed to last forever. Alan Greenspan, whose oracular endorsement was perhaps the single most decisive event in their passage, made it very clear that they were a temporary solution to a temporary surplus. “Recent data significantly raise the probability that sufficient resources will be available to undertake both debt reduction and surplus-lowering policy initiatives,” Greenspan said in 2001.

Okay, so maybe he wasn’t so clear. But everyone knew what he meant. And, broadly speaking, they agreed. We had a big surplus. It was time to do something with it. Brad DeLong, a former Clinton administration official and an economist at the University of California at Berkeley, didn’t want to see the surplus spent on tax cuts. He wanted to see it spent on public investments. “Nevertheless,” he wrote in 2001, “it is hard to disagree with Greenspan’s position that — if our future economic growth is as bright as appears likely— it will be time by the middle of this decade to do something to drastically cut the government’s surpluses.”

Ten years later, there is no surplus. It turned out that our future economic growth wasn’t as bright as had seemed likely in 2001. That, plus $2 trillion in tax cuts and a few trillion more in wars and assorted spending, left us with large and growing deficits.

The next step, then, is obvious. The Bush tax cuts were scheduled to expire after 10 years. Congress extended them for two years in 2010, as you don’t want a massive tax increase in the middle of a deep recession. But as we look toward our future deficits, it seems we’ll need to let at least some of the tax cuts expire. Indeed, Greenspan now says we should let all of the Bush tax cuts expire.

But the Republican Party refuses to let any of them expire. And forget admitting that tax cuts meant for surpluses don’t make sense during deficits; they refuse to admit that tax cuts have anything to do with deficits at all.

It’s this belief that stands in the way of a debt deal. “We have a spending problem, not a taxing problem,” Republicans say. If the federal government defaults on Aug. 2, that sentence will be to blame. What a shame, then, that the sentence is entirely, obviously, wrong.
Sadly, those who do not know history are condemned to repeating it, and repeating it, and repeating it.

I think it is funny how the Republicans distort and lie and the media never calls their bluff. Instead, people treat the propaganda of the political right as if it were serious "debating points" and want to "engage" the Republicans in dialog. What a waste of time. These guys have one goal: shrink government to the size that will fit in a bathtub, then strangle it. They hate government. They want to live in a "state of nature" where the naturally superior (think of Billy the Kid armed to the teeth) will rule over the inferior (those foolish enough to work 8 hour days and try to raise a family).

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