Poor George W. Bush has been the target of the Democrats for going on five years now. It was all George W. Bush’s fault. He was responsible for instituting those terrible tax cuts that everyone has hated for over a decade now but at the same time our loving taxpayers enjoyed the higher take home money, and, of course, every administration adjusted its budget to reflect this lower revenue by reducing its spending accordingly. Is the Brooklyn Bridge for sale?
President George W. Bush came up with a seemingly brilliant strategy to force through enormous tax cuts. Rather than compromise with Senate Democrats to get substantial permanent cuts, George used a legislative process called “reconciliation” to push through mega cuts with the narrow Senate majority the Republicans held, avoiding the need for 60 votes to overturn a filibuster should one get started. Because of the way reconciliation works, the 2001 Bush tax cuts had to expire in 10 years. At some point the zealots figured, they would get the votes to make the cuts permanent. And even if they didn’t, by the end of 2010 no one would dare let the cuts lapse. We would be in an economic boom and life would be grand. Not really. The eight Bush years were an economic and fiscal sinkhole. But now the day of reckoning has come. In reality, these tax cuts should expire or at least be modified to the current economic environment as our country’s real fiscal problem isn’t the federal budget deficit it is the huge increase in debt our country is incurring to pay its current bills!
So what is the answer? Well, let’s blame President Herbert Hoover! Hoover’s economy lost 6.4 million jobs in four years and unemployment rose to 24.9%. Real output collapsed during the Hoover administration. Under Hoover the top income tax rate went from 25% to 63% and 40% tariffs were imposed on imports. Maybe if Hoover had done his job, President Roosevelt wouldn’t have to propose a new Social Security tax in 1937 and we would never have had this entitlement program to start with. No, it does not make any sense to go back and start the blame game.
We have enjoyed the Bush tax cuts since 2001 and politicians hoped that revenue would increase enough to keep the tax cuts in place and balance our hopelessly “out of balance” federal budget while we spent ourselves into bankruptcy. Even after one two year extension, there is some serious doubt as to whether we can extend these tax cuts any longer without drastically reducing our federal spending. As much as Obama slams the Republicans for his problems, he is seriously considering extending these Bush tax cuts 12 years after their implementation. Obama’s issue with the Republicans is not whether we should extend these tax cuts but to what income level should they be extended. But no one seems to want to address the real issue of how do we pay for them? Government gets its income from taxes. If we reduce taxes, we reduce the government’s income – Economics 101.
We are going over a fiscal cliff because our government bank account has no money in it and the government check book is empty. Our government master cards are maxed out and the government has made commitments to its citizens that it does not have the money to honor. Instead of trying to blame the other guy, what about bringing spending back in line with revenue and being honest with the American taxpayer? The coffers are empty. What a novel idea.