Saturday, September 28, 2013

If the Rich Were Paying Their Share, We'd Have All the Money We Need

President Obama has cut the deficit from $1.4 trillion in 2009 to $650 billion this year.  Unfortunately, he's done it by caving to repug demands for austerity - domestic spending cuts that have kept 12 million people unemployed and shredded the social safety net.

And all the while maintaining the inexcusable Bush tax cuts that have allowed the obscenely wealthy to steal $1 trillion per year away from the rest of us.


Before we get back into the exciting world of budget negotiations, "skin in the game" and
what DC likes to call "reform", we should take a look at this friendly reminder via Wonkblog about what's causing the national debt.

The best chart on this is the so-called "parfait chart" by the Center on Budget and Policy Priorities (CBPP), which breaks down what specific policies caused the big increase in the U.S. federal debt in the 2000s. Strikingly, the current debt was almost entirely caused by events in the past 13 years.

The most important factor was the Bush tax cuts of 2001 and 2003, which greatly reduced federal revenues and put the federal government into deficit after the surpluses of the late '90s and early '00s, but the economic downturn, the stimulus and other recovery measures, and the wars in Iraq and Afghanistan all played important roles too.

Without those four things, we'd have a debt burden around 20 percent of GDP — far too small to even start to worry about, and smaller than every developed country other than Luxembourg.
The Republicans like to say "we don't have a revenue problem,we have a spending problem" But as with virtually everything they say and do, in reality, it's the opposite. If you look at that chart you can see that the problem isn't spending.  It's the shortfall of revenue caused by the Bush tax cuts which build on themselves over time.

But we knew that.  It's just that reality is irrelevant to this discussion because everyone in Washington has obsessed over deficits and taxes for so long that they have no language left to communicate the problem. The president seems to think the deficit reduction that's been done on his watch is a fantastic achievement. (In fairness, Bill Clinton did too, but at least his was brought about during a great economic boom rather than by brutally cutting government programs during an epic economic slump.) So unfortunately, there's nobody to champion the idea that we could be creating a better society for ourselves and our children if we'd just be willing to tax the rich at a fair rate and be willing to put up a little bit more ourselves when we can spare it. Instead we're stuck spending every bit of energy we have to keep them from cutting Social Security or raising the Medicare age. What a shame.

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