These tea parties on Tax Day reveal the hypocrisy, ignorance, and insanity of some Americans. Where were these tea parties during the Bush II spending spree? Not only did former President George W. Bush spend the surplus that former President Bill Clinton enjoyed, but he also sunk the deficit to new lows.
Although Americans were already living quite well and unsustainably off borrowed credit, Bush II cut taxes for mere political reasons. However, how can tax cuts remedy the annual deficit and the national debt—the sum total of these yearly deficits?
Furthermore, Bush II didn’t even raise taxes to pay for the failed Iraq War (instead of raising taxes to pay for the Iraq War, he concealed “the war’s cost”), because former President George W. Bush needed eight years to impose his political and world views (and I’m sure many of the same individuals that supported the invasion of Iraq and Iraq War support these so-called tea parties). From Jonathan Coopersmith (emphasis added):
In the case of Iraq, instead of raising taxes to pay for the war, the current Bush administration is cutting them, adding hundreds of billions of dollars to the federal deficit. The Bush administration has raised the ceiling on the national debt from $5.95 trillion in 2001 to $9.62 trillion in 2006, an increase of over 60 percent in five years. All this debt must eventually be repaid by taxing us, our children and our grandchildren.
Why this flight from financial reality? No politician likes to raise taxes. The Bush Administration has made cutting taxes a policy hallmark and has vigorously opposed any discussion of raising any taxes.
Before it invaded Iraq, the White House disavowed its treasury secretary, John Snow, who estimated the war would cost $100-200 billion. The administration argued that the war would cost only a few tens of billions of dollars, hardly enough to get excited about. Since then, the administration has funded the war through annual supplemental requests instead of regular budget appropriations, effectively hiding the war’s cost.
For their part, Democrats have not tried to pay for the war by raising taxes for fear the Republicans will call them “tax-and-spend” liberals. Although this is a far more responsible policy than being a “borrow-and-spend” conservative, a platform of fiscal frugality will not win elections in today’s polarized political climate. Nor, afraid of being accused of not supporting the troops, have Democrats attempted to challenge funding for the war.
Ultimately, can the philosophy of small government and tax cuts work in this complex world, since nations are susceptible to crumbling infrastructure, environmental degradation, natural disasters, healthcare needs, war, and a dependency on foreign oil—a nonrenewable resource (as supply decreases and demand increases, prices increase; so the current model of relying largely on nonrenewable energy sources is no longer smart policy). With no new taxes, how is the U.S. government supposed to pay for the services we need and enjoy? How are Republicans the party of fiscal conservatism when Republican presidents Ronald Regan, Bush I, and Bush II weren’t? Finally, what is the meaning behind these tea parties when there are so many conflicting messages? From the Los Angeles Times (emphasis added):
The original Boston Tea Party was caffeinated by a very simple injustice: American Colonists refused to be taxed by a government that lacked any popular representation. That was remedied a few years later in a heroic struggle that stretched from Concord to Yorktown.
. . .
These same conservatives, however, were mum when George W. Bush erased our budget surplus and put us deep in the red by drunken spending on a pointless war in Iraq and by, yes, granting massive tax rollbacks for the loaded country clubbers who fund the GOP (and Armey’s FreedomWorks). Another bothersome detail: The bailouts were also initiated by Bush.
Nobody I know is very pleased with the billions ladled out to teetering banks and corporations. Yet a clear majority of Americans are sophisticated enough to know that these bailouts are a necessary evil and are intended — unlike the lollipop Bush tax cuts — not for personal profit but rather as a radical, emergency measure to help Americans keep their jobs, their homes and their retirement.
And while way too many otherwise sane Republicans are actively pandering to the tea-bag battalions, some old-fashioned conservatives are calling out the Teabaggers for their silliness. Writing in Fortune magazine, conservative policy analyst Bruce Bartlett, who has a long anti-tax history, says: “The irony of these protests is that federal revenues as a share of the gross domestic product will be lower this year than any year since 1950. … The truth is that the U.S. is a relatively low-tax country no matter how you slice the data.”
The Tea Party movement, more than anything else, is a rather garish display of a Republican right that seems to have lost not only the national elections but also any semblance of political bearings. Staying on this course, the GOP risks — in the words of one pundit — becoming “the Talk Radio Republican Party.”
The images are via Digg, zFacts.com, and Citizens for Tax Justice
UPDATE 1 (15 Jan. 10): The consequences of the Bush II Administration’s policies and its spending spree are staggering. It’s was something the so-called tea party movement missed. From the Washington Post:
The day the Bush administration took over from President Bill Clinton in 2001, America enjoyed a $236 billion budget surplus — with a projected 10-year surplus of $5.6 trillion. When the Bush administration left office, it handed President Obama a $1.3 trillion deficit — and projected shortfalls of $8 trillion for the next decade. During eight years in office, the Bush administration passed two major tax cuts skewed to the wealthiest Americans, enacted a costly Medicare prescription-drug benefit and waged two wars, without paying for any of it.
To put the breathtaking scope of this irresponsibility in perspective, the Bush administration’s swing from surpluses to deficits added more debt in its eight years than all the previous administrations in the history of our republic combined. And its spending spree is the unwelcome gift that keeps on giving: Going forward, these unpaid-for policies will continue to add trillions to our deficit.
This fiscal irresponsibility — and a laissez-faire attitude toward the excesses of the financial industry — helped create the conditions for the deepest economic catastrophe since the Great Depression. Economists across the political spectrum agreed that to deal with this crisis and avoid a second Great Depression, the government had to make significant investments to keep our economy going and shore up our financial system.
UPDATE 2 (6 Feb. 10): How is President Obama doing on spending cuts? He’s doing better than former president George W. Bush. From the Washington Times:
President Obama notched substantial successes in spending cuts last year, winning 60 percent of his proposed cuts and managing to get Congress to ax several programs that had bedeviled President George W. Bush for years.
The administration says Congress accepted at least $6.9 billion of the $11.3 billion in discretionary spending cuts Mr. Obama proposed for the current fiscal year. An analysis by The Washington Times found that Mr. Obama was victorious in getting Congress to slash 24 programs and achieved some level of success in reducing nine other programs.
. . .
By comparison, the Committee for a Responsible Federal Budget says Mr. Bush won 40 percent of his spending cuts in fiscal 2006 and won less than 15 percent of his proposed cuts for 2007 and 2008.
Mr. Obama’s cuts shine a bright spot in an otherwise dreary budget picture. The Congressional Budget Office said the deficit for fiscal 2010, which began Oct. 1, is building at a record pace, reaching $389 billion for those first three months.
Even though the president succeeded in winning a high percentage of his cuts, they still account for well less than one-half of 1 percent of the total federal budget.
More from Jonathan Chait:
I remember Bush’s fiscal policies, and the political environment that surrounded them, pretty well. In the wake of the Bush administration’s collapse, its defenders have been mostly laying low, trying to make their man look good by taking passive-aggressive shots at his successor. I’ve been waiting for Bush’s loyalists to try to rewrite the past. So consider this fisking the beatdown that was nine years in the making.
. . .
As budget surpluses appeared in the late 1990s, some level of giddiness crept into the thinking of both parties. But it was the right that went completely overboard. Conservatives were writing books like “Dow 36,000″ and insisting prosperity would last forever. You might think it’s odd that the right would be hyping prosperity during a time when a Democrat held the White House. But the giddiness had a political purpose: it was useful to disarm Democratic fears that tax cuts might weaken America’s fiscal position.
. . .
Republicans successfully dismissed such fears. They insisted that the CBO, run by musty old Keynesians who failed to appreciate the wonders of the dynamic new economy, was dramatically understating the surplus. “Economist Lawrence Kudlow has been the nation’s most accurate fiscal prognosticator of the last decade,” wrote Stephen Moore, “and he estimates tax surpluses will be twice as large as the official forecast.” They further proclaimed that the Bush tax cuts would unleash even more growth, meaning that the CBO forecasts must be too pessimistic. Martin Feldstein testified, “The true cost of reducing the tax rates is likely to be substantially smaller than the costs projected in the official estimates.” In his 2001 State of the Union speech advocating tax cuts, Bush cleverly spoke as if the surpluses had already materialized, and the proceeds been salted away:
We have funded our priorities. We paid down all the available debt. We have prepared for contingencies. And we still have money left over.
The Bush administration furiously and successfully beat back Democrats’ attempts to inculcate caution and modesty about the projected surpluses. To cast the administration as victims of a “mistake” requires a a staggering level of chutzpah.
. . .
This is misleading bordering on outright false. When Clinton was president, Congress had to operate under pay-as-you go budget rules, which meant that any new tax cut or entitlement increase needed to be offset by an entitlement cut or tax hike. In 2001, Congress waived those rules in order to facilitate passage of the Bush tax cuts, which had no offsets. In 2002, Congress let those rules expire, over Democratic objections. It’s also worth noting that Democrats in 2001 tried to force Bush to account in his budget for the prescription drug benefit he had already endorsed, but were defeated by the GOP.
If the Republicans had not brushed aside the budget measures the Democrats had been using (and have since put back into place), the Medicare benefit would have needed spending cuts or tax hikes to be enacted. Indeed, if you’re wondering why the GOP had an easier time with its 2003 Medicare entitlement than the Democrats have had with their 2010 health care entitlement, the main reason is that the former put the whole thing on the country’s credit card while the latter have had to find unpopular offsets for every dollar they spend.
. . .
Bush is clearly guilty of having played an enormous role in having created the mess in the first place. To blame Obama while exonerating Bush is astonishing.
Image via the Center on Budget and Policy Priorities
UPDATE 3 (28 July 10): Republican policies (and ignorance) hinder efforts to cut the debt. Via The Daily Dish:
Anyone who wants to cut the debt and restore fiscal balance in America would be insane to vote Republican this fall. Why? Because they have still not abandoned supply-side economics, which was taken to its logical extremes under Bush and Cheney.
More via FT.com (via The Daily Dish):
What conclusions should outsiders draw about the likely future of US fiscal policy?
First, if Republicans win the mid-terms in November, as seems likely, they are surely going to come up with huge tax cut proposals (probably well beyond extending the already unaffordable Bush-era tax cuts).
Second, the White House will probably veto these cuts, making itself even more politically unpopular.
Third, some additional fiscal stimulus is, in fact, what the US needs, in the short term, even though across-the-board tax cuts are an extremely inefficient way of providing it.
Fourth, the Republican proposals would not, alas, be short term, but dangerously long term, in their impact.
Finally, with one party indifferent to deficits, provided they are brought about by tax cuts, and the other party relatively fiscally responsible (well, everything is relative, after all), but opposed to spending cuts on core programmes, US fiscal policy is paralysed. I may think the policies of the UK government dangerously austere, but at least it can act.
This is extraordinarily dangerous. The danger does not arise from the fiscal deficits of today, but the attitudes to fiscal policy, over the long run, of one of the two main parties. Those radical conservatives (a small minority, I hope) who want to destroy the credit of the US federal government may succeed. If so, that would be the end of the US era of global dominance. The destruction of fiscal credibility could be the outcome of the policies of the party that considers itself the most patriotic.
In sum, a great deal of trouble lies ahead, for the US and the world.
Where am I wrong, if at all?
UPDATE 4 (21 Oct. 10): Via Taegan Goddard’s Political Wire:
New York Times: “The parties share blame for the current fiscal situation, but federal budget statistics show that Republican policies over the last decade, and the cost of the two wars, added far more to the deficit than initiatives approved by the Democratic Congress since 2006, giving voters reason to be skeptical of campaign promises.”
“Calculations by the nonpartisan Congressional Budget Office and other independent fiscal experts show that the $1.1 trillion cost over the next 10 years of the Medicare prescription drug program, which the Republican-controlled Congress adopted in 2003, by itself would add more to the deficit than the combined costs of the bailout, the stimulus and the health care law.”
UPDATE 5 (22 Oct. 10): What about the bank bailout? It earned “an 8.2 percent return over two years.” Via Taegan Goddard’s Political Wire:
The federal government’s bailout of financial firms “provided taxpayers with higher returns than they could have made buying 30-year Treasury bonds — enough money to fund the Securities and Exchange Commission for the next two decades,” Bloomberg reports.
“The government has earned $25.2 billion on its investment of $309 billion in banks and insurance companies, an 8.2 percent return over two years, according to data compiled by Bloomberg. That beat U.S. Treasuries, high-yield savings accounts, money-market funds and certificates of deposit. Investing in the stock market or gold would have paid off better.”
On the Net:
- The Tea Party Timeline…
- Critics Still Wrong on What’s Driving Deficits in Coming Years: Economic Downturn, Financial Rescues, and Bush-Era Policies Drive the Numbers
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