February 17, 2010
-- by Dave Johnson
This post originally appeared at Campaign for America's Future (CAF). I am a Fellow with CAF.
Today's new York Times has a front-page story (really an editorial) that promotes cutting the Social Security pensions of Americans and other things that we as citizens are entitled to.
Many analysts say the president and Congress could send a strong signal to global markets by agreeing this year to a package of both long-term tax increases and spending reductions, especially in the popular entitlement programs, that would not take effect until 2012.
Let's remember how we got here.
For decades following the depression and WWII the country had operated with a budget that was in or nearly in balance while maintaining our infrastructure and investing in our future. Past concentrations of wealth were decreasing, the middle class was expanding, and we led the world in growing prosperity.
The trouble all started when we dramatically cut taxes on the rich. For decades the top tax rate was 90%. Then we cut it to 70% and then 50% dramatically from there all the way to around 30%. The budget immediately went completely out of balance. The tax cuts created a "structural deficit."
At the same time as we cut taxes for the rich we raised taxes on everyone else, saying the money would be used to pay for peoples' retirement. However, that money instead was used to defer the damage caused by the tax cuts for the rich.
And we started to dramatically increase the military budget. Today we spend about $1 trillion a year on military, veterans, intelligence, nukes, and the share of debt interest from past military spending -- more than every other country in the world combined.
And we started cutting everything else back. We cut back investing in R&D, schools, transportation, you name it. We stopped even maintaining the existing infrastructure. The very investment that could have led to economic growth was cut because of those tax cuts.
And now because the debt and continued borrowing -- caused by those huge tax cuts for the rich and huge increases in military spending -- has gotten SO bad, the corporate and media elite demand that we ... cut back the pensions of old people, further decrease infrastructure maintenance and investment, etc. ? As the SNL Church Lady used to say, "Isn't that conveeeeenient?"
They are trying very hard to keep the public from noting that we spend more on military than the rest of the world combined, and that the budget and economy worked so much better when tax rates at the top were very much higher. If you want to fix the borrowing you need to fix the cause of the borrowing. You need to get the money from where the money went.
Posted by Dave Johnson at February 17, 2010 7:34 AM
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