Imagine a family living way beyond its means. Both its primary earners have been reduced to part time jobs, earning just barely three fourths of what they had before cut backs. Nonetheless, despite the missing revenue, they still are trying to live at the "full" two income standard - making up for the difference with credit card spending.
Their credit card debt is running over $2500 a month while they take in only $1600. $900 of that debt is due to a home alarm system alone - "defense spending" as they refer to it, which they refuse to jettison. But if they had the sense to remove that, their finances would at least break even. They wouldn't gain each month, but they wouldn't fall further into a debt hole either!
The U.S., with deficits forecast this year to hit $1.4 trillion, is in much worse shape than the family - and it's also on the verge of making things worse, by effectively knocking out an additional stream of income! (The same as if one of the family's two primary earners just stopped earning, and $800 in revenue was missing every month.) What calamitous event could be comparable to the family losing half its revenue: extending all the Bush tax cuts!
As I noted in my earlier blog on the topic, this is unconscionable right now. It serves only the interest of the wealthier, better off elites, while not doing jack sh*t to reduce deficits, or increase jobs. I noted the reasons - that giving breaks to the rich does NOT lead to their greater investment in the economy - either by way of job creation, more public investment for constructive purposes (say infrastructure repair), it only leads to their further dabbling in speculation (often in risky instruments) that places the financial system at further risk. Often this arrives via new and obscure derivatives, which even the new finance legislation can't fully control (since the ability to monitor derivatives in a closed market was eliminated).
Why can't our congress critters, Senators see this - especially the DEMOCRATS? Because they are cowards at heart, running scared as the November elections approach, and they're petrified that they'll lose if they don't vote for legislation that extends all the Bush tax cuts beyond their January 1, 2011 expiration date. While some time earlier there was general consensus that at least the Bush tax cuts for the rich ought to be allowed to expire (which would save $800 billion over ten years, as Tim Geithner noted) now some Dems want to extend ALL the cuts!
This is insane, and will lead to a nearly $1.8 trillion deficit by 2020. We can't afford this. This in a hyper-deficit environment where hawks are already calling for cuts to Social Security and Medicare! The fact that DEMOCRATS want to enable this perfidy is so abominable, it's almost beyond words to describe, but we've seen it before.
Just as Kent Conrad (ND), and Ben Nelson(NE) et al are doing now, the chicken Dems ran for cover in 2001 as well, when Bush Jr. proposed monstrous $1.7 trillion tax cuts that the Ds had to know would eviscerate their programs later. They couldn't be so stupid that they didn't know. But though the Republicans didn't have the numbers, 12 coward D-Senators bolted to give them the margin needed to pass the legislation. Most of these (e.g. Max Baucus, Mary Landrieu, Jean Carnahan, John Breaux), were from putative "swing" states or heavy conservative districts and felt politically pressured. Translation: they valued their political careers more than the national welfare. We see the exact same thing now.
Conrad, Nelson and the others are prepared to give in and legislate an extension of all the Bush tax cuts. You can also make book that later - maybe three or so years down the line, they'll demand Social Security and Medicare be cut to pay for them. And where have we seen this dog and pony act played out before? Well, in 2004, the Fed Chairman Greenspan urged Congress to reduce Social Security benefits and raise the retirement age (now 65 to 67 depending on birth year) rather than roll back the Bush tax cuts. (Despite the then CBO report that the tax cuts for the rich were then the main cause of growing budget deficits.)
Earlier, in the Reagan era, as a savvy letter writer to The Financial Times noted, tax cuts were employed to increase the nation's inequality - giving the rich more and taking away support for the ordinary workers. As the FT letter writer put it (July 22, letters):
"Reagan cut social programs for the middle class and the less well off and increased the military budget- to the benefit of big defense contractors, and above all, he cut taxes on the rich."
The letter writer was also perceptive enough to recognize Reagan's nod to Overclass interests via his actions, not to mention the over-arching theme of "starving government" to make any later domestic spending or public assistance (by a later Dem administration) virtually impossible. To his credit, the FT letter writer also makes the connection to today's rabid band of tax cutters, including the cowardly Dems who'd enable them like they did in 2001. He goes on to note:
"There can be no other explanation as to why today's successors to Reagan are so eager to add to the deficit by cutting taxes for people in the highest income brackets, while blocking any extension of unemployment benefits.."
Of course, the unemployment benefits package finally passed, but the issue of what will unfold next year is still with us. If the Dems have the courage to do NOTHING between September - when the current sesssion resumes, and the end of the year - it will be optimal. Doing absolutely nothing will at least allow ALL the Bush tax cuts to automatically expire at year's end.
Predictably, the Repukes have threatened mass political mayhem if no legislation is forthcoming, and they include in that their demand for any pending legislation be "open" so they can add amendments at will. With a number of Dem Senators threatening to join forces (as the12 Judas Priest cowards did in 2001) things could get very ugly, especially as the Reptiles amp up their psychological extortion, by yakking about the "biggest tax hike in American history" if all the Bush tax cuts expire. What I'm hoping is that citizens, for whom this issue is still on the back burner - will waylay their legislators with millions of emails, and letters and tell them to do what's right for the COUNTRY, not what's expedient for furthering their Beltway careers.
Citizens need to know that NOT extending those Bush tax cuts is in THEIR long term interest! Yes, extending them will give the average family earning $48,000/ yr. about another $350 a year to play with (compared to about $58,000 for one of the top 1%), but that's chicken feed relative to their future Social Security and Medicare benefits! People have to be made to see beyond their economic needs for a month, or a year.
If all else fails, we can only hope for so much bedlam and chaos to break out in the attempt to pass any legislation, that it becomes impossible to do so - whether to extend all the Bush tax cuts, or just a portion. In that case, all of them will expire on time - and the Deficit-bleeding, tax cut hungry "Dracula" will hopefully then be permanently interred with the appropriate stake through his heart.