I couldn’t agree more with Fareed Zakaria’s latest article in the Washington Post about the Bush Tax Cuts.
Republicans and Democrats both agree that the massive U.S. budget deficit looms as one of the most dangerous threats to our nation’s economy. And Congress has the opportunity to immediately eliminate a fourth of that deficit by doing nothing.
The Bush Tax Cuts are set to expire this year, which will inevitably cut about $300 billion from the U.S. budget deficit. These massive tax cuts – passed in 2001 and 2003 – lowered taxes for the wealthiest 3 percent of Americans.
Republicans had argued that these tax cuts would pay for themselves, by providing big businesses big profits and thus, more money to pay back in taxes. But as former Federal Reserve Chairman Alan Greenspan told NBC’s “Meet the Press” on Sunday… “They do not.”
“I’m very much in favor of tax cuts but not with borrowed money and the problem that we have gotten into in recent years is spending programs with borrowed money, tax cuts with borrowed money,” he said. “And at the end of the day that proves disastrous.”
Democrats now want to let these tax cuts expire for anyone making more than $250,000 a year. But Republicans argue we should extend these tax cuts for the rich indefinitely.
Republicans argue that letting taxes go back to Clinton-era levels would trigger massive layoffs as foreign investors and corporations look elsewhere to do business. But even with these tax cuts, the U.S. has one of the lowest tax rates in the industrialized world.
President Bill Clinton raised taxes and the U.S. economy experienced robust growth and one of the largest budget surpluses since President Harry Truman. President George W. Bush inherited that surplus and immediately cut taxes for the wealthy; we experienced a decade of very stagnant job growth, and one of the largest recessions in U.S. history.
The fact is that the Bush Tax Cuts were unaffordable, irresponsible, and a completely failed experiment meant to pander to a populist ideology, while winning campaign financing from mega-huge banks and corporations.
Allowing these tax cuts to expire is a necessary, responsible burden the country must confront. Social security costs money; Medicare costs money; Medicaid costs money; and never-ending wars cost money – and Republicans do not propose cutting spending on any of those policies (particularly with the ultra-expensive Medicare spending bill they passed when they were in power).
The United States continues to have one of the smallest governments among the world’s rich countries (with the exception of our military). We can argue all day that we must cut spending without any real suggestions for what to specifically cut. But until then, we must figure out a way to pay for the government we already have. And letting the failed Bush Tax Cuts expire would be a meaningful start.