Sign up for email updates


National Debt

$800 Billion Road to Ruin: Tax Cuts and Spending

  • December 18, 2010

    Our elected officials, once again, have shown their exceptionally flimsy grasp of how a balanced budget works and how to reduce out staggering national debt.

    In what is feeling more like an episode of the "Three Stooges", the president and Republican members of the Senate have worked together to pass legislation that both will pat themselves on the backs for but will instead drive our country deeper into the abyss of debt in which we already find ourselves neck-deep.

    Republicans wanted the Bush-era tax cuts (tax cuts: this means we are paying LESS than we should be; a return to normal levels is NOT a tax increase) for all income groups to remain intact and not to expire for persons making over $250,000 per year.  The perennial claim is that if money is taken away from this group that the rest of the economy will suffer because these are the people whom fuel the economic engine (via making purchases and using services) which then trickles down to the rest of the socioeconomic levels.

    The problem with this theory is that people earning over $250,000 a year, for the most part, will continue making purchases and using services because they can afford to even without the tax cuts.  When people with high levels of income get more income, they don't tend to spend it – they tend to save it (they can already afford buy what they want) which, while making them wealthier, does nothing for the economy, our national debt, or any other socioeconomic class.

    Additionally, the across-the-board tax cuts (again, tax cuts: this means we are paying LESS than we should be; a return to normal levels is NOT a tax increase) were crafted at a time of financial surpluses prior to September 11, 2001 and prior to the U.S.'s engagement in two wars.  Neither of these conditions are even close to existing today.

    The president, in return for acquiescing to republicans, was awarded a short-term unemployment benefit package that isn't being paid for by anyone or anything and is just adding to the national debt.

    It should be noted that should the tax cut (and one more time -- tax cuts: this means we are paying LESS than we should be; a return to normal levels is NOT a tax increase) and unemployment benefit bill become law, it would also likely be the end of the U.S.'s triple-A credit rating.  According to Moody's,

    "the negative effects on government finance are likely to outweigh the positive effects of higher economic growth. Unless there are offsetting measures, the package will be credit negative for the U.S. and increase the likelihood of a negative outlook on the U.S. government's AAA rating during the next two years."

    It is unfortunate that the only apparent goal of our elected officials is to remain elected officials; otherwise we might have righted our listing ship of a nation earlier.  Should we continue to lean and bow under uncontrolled spending and debt, a capsize is surely in our future.


Related CW Articles

See all related stories »