Thursday, July 28, 2011

Understanding the US Deficit Debate

It helps to put numbers with ratios to help understand what all the fury is in Washington with the refusal to pass a new deficit ceiling without some "deficit reduction".

Here is a post by Dean Baker at his Beat the Press blog that provides the explanatory numbers:
Does Everyone Know How Much $2.2 Trillion Is Over the Next Decade?

It seems unlikely that many people, even among the relatively well-educated readers of the New York Times and Washington Post, have much clue as to how much money is at stake in the battle over the debt ceiling. As some points of reference, the government is projected to spend roughly $46 trillion over the next decade. This means that $2.2 trillion in cuts would be around 4.8 percent of projected spending.

However, the impact is likely to be much larger on specific portions of the budget. If Social Security, Medicare, and Medicaid are left off the table, and most of the cuts come from the discretionary portion of the budget (which includes most government investment in infrastructure, education and research), then $2.2 trillion in cuts would come to 15.2 percent of projected spending. There is also the question of the division of the cuts between domestic discretionary spending and military spending. In the extreme case where all the cuts came from the domestic side of the budget, the cuts would be 32.8 percent of projected spending.

Finally, it is worth asking how large these proposed cuts are relative to the size of the economy. GDP is projected to be almost $200 trillion over the next decade. This means that if the government could raise taxes by an amount equal to 1.1 percent of projected income it would raise enough money to [cover] the spending cuts being debated by Congress.
So the horror of cutting government services could be avoided by a modest tax increase of 1.1% and given a progressive tax system, that means that the bottom 90% could expect an increase of much less that 1% while the top 1% of income earners could expect an increase of roughly 3-5%. If you are making $100 million a year, having to fork over another $5 million may be "painful" but how does that "pain" compare to a retiree not having enough for food, shelter, and drugs? In a fair world, the millionaire would do his duty and fork over the added contribution. But in the "new reality" of Republican-controlled US, it probably means more tax cuts for the rich -- sorry, the "job creators" -- and even bigger hardships for the poor.

If you want to understand the vicious double-speak of the right wing fanatics in the late 1930s and early 1940s when the world fell apart, you only have to look at the crazies who are "in charge" in Washington today, the Republicans.

Here is an insight into the "brave new world" that the Republicans love and want to spread and to make happen again and again and again...

This is the wonderful world where the lions inherit the world from the lambs.

This is the world where the "smart money" bets against the people and bring down a country.

This is the world where criminals and fraudsters get to perpetrate their crimes with no inhibition.

This is the world where Wall Street psychopaths get the "little people" to bail them out and help them collect record-setting "bonuses" for their sterling "performance" in crashing the world's economy.

This is the world brought to you by the Republican party.

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