In 2001, President George W. Bush signed into law arguably the most sweeping changes to United States tax policy in American history. Estimated to cost nearly $1.35 trillion, Republican theory contended the tax cuts were self-financed. Every tax bracket across the board supposedly would receive such significant cuts that dramatic economic growth would yield higher revenues to the Treasury under the GOP's trickle-down economic policy.
As you may have noticed, Bush left the White House with a less-than-reduced federal deficit. The fiscal policy conducted during the eight years of the Bush administration led to the highest federal deficit in U.S. history. As it turns out, the Congressional Budget Office, the nonpartisan 'referee' that evaluates legislative proposals, warned of this very outcome. But GOP philosophy took care of that the same way it handled healthcare reform: if the independent analysts don't agree, demonize and ignore them. Problem solved. It is widely acknowledged, outside Republican propaganda, that those cuts were heavily skewed to the wealthy. More than a third of those cuts, according to a Congressional Budget Office study highlighted in the New York Times, favored the top one percent of Americans who earned an average annual income greater than $1 million dollars. Such cuts shifted the tax burden to the middle class, dramatically increased wealth disparities in this country, and led to outrageous debt that the Republican Party now hopes to tie to Democrats.
The Democrats are not exactly tightwads, and though they have passed expensive legislation that most economists agree boosted our economy, the Republican midterm message bets on a foolish ploy while hoping for American amnesia. The Bush tax cuts are nearing expiration, and once again, Republicans bring the same fiscal agenda to the table that they proposed earlier this millennium. There is broad agreement that tax increases on the middle- and lower-income brackets are not great ideas, particularly during the lingering Bush recession. But the tax cuts stirring the debate address the wealthiest two percent of Americans earning more than $250,000 annually. Again, Republicans say there is no need to pay for these cuts. Sound familiar? It is increasingly similar to the initial argument made for the Bush cuts - the cuts that led to historic deficits and unprecedented shifts in income inequality. Extending all of the Bush cuts for another decade would add $2.7 trillion to the deficit, according to the CBO. But deficit-reduction Republicans don't want to pay for them? Sounds like big spending to me.
As Republicans gear up for midterm elections this fall, they want you to believe that they are fiscal-deficit hawks ready to cut the Democrats' big-spending agenda and return to the fiscal discipline displayed when they were in charge. The hypocrisy is compounded by the summer battles over unemployment insurance. Although unable to support legislation that directly injects funds into the economy for $34 billion, they are easily able to support a Bush tax cut extension favoring the wealthy for $2.7 trillion. Those spend-and-swipe Republican policies will lead us to economic disaster. But don't take my word for it. None other than Alan Greenspan, former Chairman of the Federal Reserve, stated frankly that extending those cuts without paying for them would be "disastrous." When Greenspan was asked on Meet the Press about the self-financing argument that tax cuts pay for themselves, he tersely responded, "No, they do not." But it doesn't end there. Conservative champion Ronald Reagan also has some staffers blasting the GOP hypocrisy. In the New York Times, Reagan's former Budget Director David Stockman called the plan to extend the cuts without paying for them "insidious." Stockman is no fan of what he calls the Democrats' social "welfare" agenda, but he deemed this Republican theory outright "delusional."
Republicans demand we stop talking about Bush and start talking about Obama. But we cannot be victims of Republican-orchestrated memory loss. Tax cuts are not the only problem regarding the deficit. Serious cuts in spending will be necessary to get the budget in order because the recession - the one that began with Republican policies - has reduced revenue. But it is nothing more than a political ploy to ignore the impact on the deficit by an unfinanced extension of the Bush tax cuts.
Things are not where anyone wants them to be, but we do have an economy that is still standing, a private sector that is slowly but surely expanding, a surviving and growing auto industry and a healthcare plan in place that reins in costs to consumers and reduces the federal deficit. Americans cannot afford to overlook the economic policy decisions made with the GOP behind the wheel. For all but the wealthy, the path would be full speed ahead over the cliff with the Republicans back in the driver's seat. The Republicans have only one figure in mind: 39, the number of House seats needed to swear in John Boehner as Speaker of the House.
Rex Young is an opinion columnist for The Cavalier Daily. He can be reached at ryoung@cavalierdaily.com.
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