David Stockman evicerated the Republican Party last week in an OP-ED in the NYT. It was well deserved. The expiring Bush tax cuts will increase taxes for everyone. That is a fact. The lowest rate would go from 10% to 15%. The child credit would go back from $1,000 to $500. The marriage penalty would kick back in. Of course, the biggest impact would be felt by the “rich”. They do pay most of the taxes, so they would get most of the benefit if the tax cuts are extended. This is why Larry Kudlow and the rest of the people on CNBC (they all fall into the rich category) are apopletic about the dire circumstances of letting the tax cuts expire.
I’m certainly not in favor of higher taxes, but here is where the delusion sets in. NO ONE in the Republican party has proposed any method for paying for the extension of these tax cuts. By extending the tax cuts without spending cuts, it would add $3 TRILLION to the National Debt by 2017. This would be stepping on the gas as we approach a turn on a mountain road. I would love to see one Republican stand up and offer to cut military spending by $300 billion per year, to pay for the tax cuts. It ain’t happening.
The Democrats are no better. They have offered to extend the cuts for those making under $200,000. This would ONLY increase the deficit by $2.5 TRILLION by 2017. This is what amounts to compromise in Washington DC.
The National Debt is $13.3 TRILLION today. Based on what these dunderheads are doing in Washington DC this will be $24 TRILLION by 2017. Our GDP today is $14.5 Trillion. If interest rates in 2017 are 5%, we will be paying $1.2 trillion per year in interest. If they are 10%, we will be paying $2.4 trillion per year in interest. The total Revenue of the Federal Government in FY10 is $2.4 Trillion.
Does this sound sustainable? Does it sound delusional? The Keynesian Krugmanites declare full steam ahead. More stimulus. The war mongering Fox News neo-con Republicans say bomb Iran. Both sides are delusional knuckleheads that are destroying our country.
David Stockman who served as President Ronald Reagan’s budget director, has for years been known as a deficit hawk.
Still, he was a supply sider long before many of the current crop of Republicans who support the foundational idea that tax cuts always boost the economy were in Congress.
So it’s worth noting that Stockman had a New York Times opinion piece over the weekend in which he seemed to channel liberal economist Paul Krugman in his criticism of those in the party he once served for pushing to extend the Bush tax cuts despite the impact that would have on deficits.
IF there were such a thing as Chapter 11 for politicians, the Republican push to extend the unaffordable Bush tax cuts would amount to a bankruptcy filing. The nation’s public debt — if honestly reckoned to include municipal bonds and the $7 trillion of new deficits baked into the cake through 2015 — will soon reach $18 trillion. That’s a Greece-scale 120 percent of gross domestic product, and fairly screams out for austerity and sacrifice. It is therefore unseemly for the Senate minority leader, Mitch McConnell, to insist that the nation’s wealthiest taxpayers be spared even a three-percentage-point rate increase.
More fundamentally, Mr. McConnell’s stand puts the lie to the Republican pretense that its new monetarist and supply-side doctrines are rooted in its traditional financial philosophy. Republicans used to believe that prosperity depended upon the regular balancing of accounts — in government, in international trade, on the ledgers of central banks and in the financial affairs of private households and businesses, too. But the new catechism, as practiced by Republican policymakers for decades now, has amounted to little more than money printing and deficit finance — vulgar Keynesianism robed in the ideological vestments of the prosperous classes.
Stockman joins former Federal Reserve chair Alan Greenspan in opposing extending the Bush tax cuts. There appears to be a real cleft opening up in the party between old deficit hawks and the latest incarnation of supply siders, represented by actor and former senator Fred Thompson.