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December 7, 2010

Tax Cuts Now Force Terrible Budget Cuts Later

-- by Dave Johnson

This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.

Deal or No Deal? OurFuture.org's Bill Scher and Dave Johnson make their cases for and against the preliminary tax cut deal between the President and Republican leaders. Dave Johnson's case against the deal is below. Click here for Bill Scher's case for the deal.

The White House has announced a deal on extending tax cuts for the rich, in exchange for restoring unemployment benefit extensions for those out of work more than 26 weeks. They are also going to cut the Social Security tax and give more tax breaks to businesses. I think this is a mistake.

President Obama's "deficit commission" failed, but it did make some terrible suggestions that would gut the middle class if implemented. Saying that the country is on an unsustainable budget path, the co-chairs suggested cutting Social Security benefits and raising the retirement age, getting rid of home mortgage deductions, higher Medicare premiums, getting rid of the Earned Income Tax Credit and other things. Cuts: $4 trillion. Claim: absolutely necessary to save the country from bankruptcy.

After subjecting the country to a months-long fight over a "deficit crisis" the White House is brokering this deal on cutting taxes --cutting taxes -- which only makes the claimed problems worse!

Either we have a deficit crisis or we don't. If the country really is on an unsustainable budget path won't cutting taxes now mean that raising the retirement age, raising Medicare premiums, cutting home mortgage deductions and all the rest that the deficit commission proposed will, after these tax cuts, only get us back to the unsustainable budget path we are already on, thereby requiring even more cuts to gut the middle class?

If you think the currently-suggested cuts are bad, just wait until you hear what they want cut following even more deficit-creating tax cuts. The conservative plan all along has been to force a debt crisis that they can use to force "smaller government" -- meaning less for the people: less retirement security, less health security, less education, less transportation investment, less infrastructure investment, fewer health and safety inspectors, fewer mine and oil rig inspectors, less consumer protection, etc.

How is cutting taxes going to make this situation any better? Won't it just help the conservative argument for further gutting democracy's security and protections?

As Paul Krugman points out today, this tax cut deal will have the effect of validating and rewarding the kind of hostage-taking conservatives are engaged in, ensuring its continued use. And it sets them up to do exactly this with taxes all over again when this extension expires.

As long as Republicans believe that Mr. Obama will do anything to avoid short-term pain, they’ll have every incentive to keep taking hostages. If the president will endanger America’s fiscal future to avoid a tax increase, what will he give to avoid a government shutdown?

If it works, let's do it again, they'll say. Of course they will! Using conservative "market" arguments, isn't giving in because so many are unemployed and need help just an incentive for conservatives to put even more people out of work, therefore needing even more help, so they can get the administration to cave even more? This is why our government takes the official position that it is wrong to negotiate with terrorists: it just encourages more terrorism.

Don't give in on this, it will just make the situation worse. The debt situation, the terrible budget cut situation, the conservatives-killing-jobs-on-purpose situation and the conservatives-destroying-democratic-government situation.


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Posted by Dave Johnson at December 7, 2010 3:03 PM


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