Assistance Request
Alright. I realize that I'm not very good at economics, numbers scare me, etc. But I am really struggling with just how it is that Congress (and this president) justify this latest what-seems-to-be fiscal trainwreck.
So the House passes the final form of the budget on Thursday, which cuts $40 billion from the deficit by 2010, yadda yadda yadda, so they say. Fine, I didn't agree with many of the cuts but it passed. Done deal. Now last night the Senate approves a $70 billion package of "business tax credits," "alternative minimum tax cuts," and "new tax breaks for coal-mining safety equipment and new spending on military equipment and veterans' health care." Isn't 70 billion more than 40 billion? Don't those tax cuts totally erase the program cuts just made? So basically instead of decreasing the deficit by $40 billion, we're gonna increase it by $30 billion.
The vote in the Senate for the tax package (which still has to be finalized by the House, meaning it'll probably end up being more than $70 billion all told) was 66-31, with four Republicans (Burr, Chafee, Coburn, Voinovich) voting in the minority. Senator Voinovich spoke out strongly against the tax cut plan on Wednesday, saying "It's time to put the tax-cut medicine back on the shelf" at a time when the federal government is ponying up billions for Katrina reconstruction, the war in Iraq, etc. "We've got to make some tough choices around here," Voinovich continued. He went on to say it's "immoral to bequeath trillions of dollars in debt to our children and grandchildren," and "This will not be politically easy, as I understand. The simple, undeniable fact is that we can't have it all."
I have to come down with Voinovich on this one. I understand, tax cuts don't cost all that they're projected to, and they might stimulate the economy and bring in more revenue, etc. But really, right now, are they in fact the best medicine? I'm not convinced. Feel free to contribute your thoughts in the comments, of course.
posted by JBD @ 7:41 AM
2 comments
2 Comments:
I don't know about the other tax cuts, but the alternative minimum tax has to be reformed. It was never indexed for inflation and so it's about to the point where pretty average middle-class people would have to start paying it rather than being allowed to take deductions. The mega-rich have all kinds of loopholes and such but the average well-off but not rich family does not have loopholes to exlpoit.
So I see reforming the AMT as mandatory to maintaining any semblance of fairness to the tax code. But you are absolutely right that it's stupid to reduce revenue by MORE than you're reducing spending and calling that deficit reduction. As Judge Judy says: don't piss on my leg and tell me it's raining.
More money pumped into the economy means a bigger economy. The tax cut is to be about 70 bill, we deficit spend [borrow and spend] about 425 bill this year. The spur to the economy comes far more from the deficit spending than tax cuts, at a ratio of six to one.
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