Tag Archives: tax cuts

Deficit Reduction Super Committee Fails

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Breaking news: Congress is dysfunctional.

Republicans think they’ll win the presidency and Senate next year so they don’t want to agree to anything now, and instead are going to wait a year when they’ll be able to push their plan through with much less resistance.

Democrats found some backbone (fragile though it is) and are not giving up their push for higher revenue (tax increases). So now, they’ll get to run all year on the fact that those evil Republicans held them up from doing anything good for America.

It’s infantile politics at it’s purest, and it makes me ashamed. Sure, partisan bickering has always been a part of our political process, but in this case it seems that the (financial) stakes are higher.

Tax Cuts Do Not Pay For Themselves

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Main point: Democrats raise taxes and overspend. Republicans cut taxes and overspend. The former is at least somewhat more sustainable.

Cutting the top tax rate (currently those making over $370,000) is something that has been promoted by many of the the Republicans currently running for president in the form of a flat tax (or variations of it such as the 9-9-9 plan). There are many arguments for this notion and many against.

It’s possible to point to historical data and claim that such tax cuts either do or do not lead to:

  1. Economic growth
  2. Income growth
  3. Wage growth
  4. Job creation

I’m not going to engage in such armchair analysis. I have my opinions, but they are just that, opinions, and are hardly founded in real scientific reasoning.

What I do want to say about it is that human nature and the way that politicians operate makes such tax cuts destructive to our long-term economy. Why? Because they do not pay for themselves in the short term. That means deficits increase. That’s fine, as long as the tax cuts are matched with major cuts in programs. The Republicans talk about cutting “wasteful spending”, but at the end of the day, they cut very little. So if you believe in “small government” you need to wake up a bit and realize that cutting taxes is not the first step to small government. The first step is cutting programs, and 99% of politicians just don’t have the guts to do that.

The problem in a nutshell:

  • Democrats raise taxes and spend like crazy
  • Republicans cut taxes and spend like crazy

That’s why I support Democrats that are fine with big government but want to make it more efficient.

Why the Hell Don’t the Unemployed Vote

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The chart below reveals a fundamental problem in our democracy. That is, the less educated you are, the less likely you are to vote. Coincidentally, you are also more likely to be unemployed.

Chart showing the percent of the country that has graduated high school or college and the percent of the country that votes.

Source: Ezra Klein article in Washington Post

People complain about the “Citizens United v. Federal Election Commission” case and how it allows corporations to “buy” candidates. While this is true, perhaps that’s a tiny problem compared to the fact that uneducated people don’t vote. They are therefore under-represented. It makes perfect sense then that politicians would be more concerned about tax cuts for the very rich as opposed to extending unemployment insurance.

Who is to blame here? It’s hard to say and still sound remotely objective. But I think everyone likes to blame the media. Why is the mainstream media feeding bullshit to the people? Partly because the very rich pull the strings to achieve specific goals that benefit them, but mostly because the general public for the most part lacks intellectually curiosity. I don’t like to make such sweeping generalizations, but from my limited experience of the world, it’s an empirically-reasonable one.