Follow-up on the Trillion Dollar Deficit Post

More thoughts on deficits.

James Fallows also commented on one of the graphs that was the basis of my post from earlier today and noted:

An additional significance of the chart: it identifies policy changes, the things over which Congress and Administration have some control, as opposed to largely external shocks

[…]

The point is that governments can respond to but not control external shocks. That’s why we call them “shocks.” Governments can control their policies. And the policy that did the most to magnify future deficits is the Bush-era tax cuts. You could argue that the stimulative effect of those cuts is worth it (“deficits don’t matter” etc). But you cannot logically argue that we absolutely must reduce deficits, but that we absolutely must also preserve every penny of those tax cuts. Which I believe precisely describes the House Republican position.

This is a rather important distinction, and one that has to be taken into account as we evaluate our situation: i.e., the fact that policy choices are different than responding to shocks.

Further, the bolded part (my emphasis) is key in terms of evaluating the demands of the House Republicans.   It seems pretty clear that they are more serious about maintaining the tax cuts than they are about deficit reduction.  That’s fine, if that’s their view, but at least be honest about it.

And yes:  I know the retort, which is that taxes can’t be considered a cost to government, because its not the government’s money.  All well and good, but when certain spending promises are made (the existing ones plus 2 wars and Medicare Part D, amongst other things) you have to pay for them.  It may not be “the government’s money” but, likewise, it’s not the government’s programs either in the sense that “the government” isn’t the one that cashes the SS checks, gets Medicare, or is made secure by the military.  Ultimately, the people get the benefits, not “the government” (which is an abstraction, ultimately) and so, we have to pay for those benefits, whether we like it or not.

In short:  if you make promises at value X, and expect revenues at roughly X, and then cut revenues to X-Y, but still have to spend at X (or X+Z, for that matter), you create increased deficits.  It is basic mathematics.

And yes:  spending could be reduced to account for the revenue lost as a result of the tax cuts.  However, the problem is that there is no consensus on where said massive cuts will come from (apart from foreign aid and “waste”).  Indeed, Speaker Boehner is finding out how hard it is to come up with spending cuts as he tries to present a plan to his own caucus.

FILED UNDER: US Politics
Steven L. Taylor
About Steven L. Taylor
Steven L. Taylor is a Professor of Political Science and a College of Arts and Sciences Dean. His main areas of expertise include parties, elections, and the institutional design of democracies. His most recent book is the co-authored A Different Democracy: American Government in a 31-Country Perspective. He earned his Ph.D. from the University of Texas and his BA from the University of California, Irvine. He has been blogging since 2003 (originally at the now defunct Poliblog). Follow Steven on Twitter

Comments

  1. Rob in CT says:

    Which is why Starve the Beast doesn’t work. Enough people end up thinking they can have their cake* and eat it too.

    If you want to cut taxes (exception: short-term tax cuts designed as stimulus), you need to cut spending at the same time. If you want to increase spending, you need to increase taxes to pay for it or find cuts elsewhere in the budget (exception: stimulus spending during a recession). Example: the ACA pulling $500B out of Medicare Advantage.

    Somebody has to pay the bill for the debt that was racked up over the past 10 years. This fight is about who pays. Comparatively rich people, via increased taxes, comparatively poor people via reductions in benefits and services, or a mix of both? Most of us think a mix of both is the right call. The Tea Party differs.

    That’s a simplification, of course. It’s not just who pays, but when. The macroeconomic disagreement is important too.

    * where “cake” includes benefits to living in a 1st-world country that are not easily seen throught one’s day. In other words, I think many well-off people downplay intangible benefits they receive in this society.

  2. reid says:

    Seems sad that you have to explain these simple concepts that an 8 year old could grasp.

  3. An Interested Party says:

    Seems sad that you have to explain these simple concepts that an 8 year old could grasp.

    Sad, but hardly surprising…another post noted how very few of the incoming GOP freshman elected to Congress in 2010 even bothered to attend a conference held at Harvard that would have given them important information that they could have used in their new positions…one wonders what other classes they’ve skipped…

  4. OzarkHillbilly says:

    And just in case some here were confused, let me state explicitly: If the richest country in the world can not take care of it’s aged, it’s disabled, is not a great country. It is a morally bankrupt one.

    Especially when it is paying for 2 (ooops, 3) totally unnecessary wars.

  5. jukeboxgrad says:

    It seems pretty clear that they [House Rs] are more serious about maintaining the tax cuts than they are about deficit reduction.

    Yes, exactly. I think this is a key point. And not just maintaining: increasing.

    I think perhaps the best proof of this (that they care much more about low taxes than about deficit reduction) is the fact that the Ryan budget keeps running deficits until 2063. This is so revealing, because that document is not bipartisan. No one can make excuses for it by saying ‘the Dems made us do it this way.’ Rather, it’s a pure expression of what the House Rs want and envision.

    Instead of rolling back the ‘temporary’ Bush tax cuts, they chose to cut taxes further. Even though this means the debt keeps growing and growing, year after year, until 2063. To anyone paying attention, this is like a big flashing neon sign that says ‘we think it’s fine to live beyond our means and pass along the bill to everyone’s kids; just make sure our taxes are low.’

  6. Bob says:

    If you claim the Bush tax cuts are the cause of the deficit, then logically you should demand all of it be repealed not just a small portion. The point the people pushing repeal ignore is that while the total amount of the Bush reductions were over $3T, the upper income portion was less than 20% of the bill. The top 1% of earners pays 64% of the income tax; that is more than fair.

    People wanting a balanced approach should look at taxing the 50% of the income earners that pay no income tax at all.

  7. geoge says: