I agree, its a bit worrisome. Makes you wonder why Republicans keep cutting taxes (reducing revenue) and then complain about spending.
They are arguing about how to cut 33 billion from the deficit this year but staunchly defended the bush tax cuts for the wealthy which will cost us more than 70 billion a year. Somewhat hypocritical, I'd say. It's going to take both spending cuts and increasing revenue to dig ourselves out of this hole.
Americans pay less in taxes now (as a percentage of total income) than we did 60 years ago. Something like 45% of corporations pay no taxes whatsoever (because of loopholes). When businesses were whining last year about Obama not being nice enough to businesses they were paying less in taxes than they had in 10 years and were recovering already from the recession.
Americans need to stop complaining about foreign aid while increasing defense spending, for example, and the Tea Party candidates need to stop pretending it's about money when the main programs they target are social programs which help people and don't cost much. (Cutting Planned Parenthood saves about as much money per year as one weeks worth of military maneuvers in Libya.)
Someone responded to me with a simple one line type email pointing out that this isn't hypocrisy, simply desire to stop both taxation and unreasonable spending. I figured I needed to expand, which I did...
Good point, "hypocritical" was the wrong word for that specific situation I described. Let me fill out the picture of what was going on in my head when I wrote that.
Rewind the clock to late 2010. The Republicans had just won back a number of seats, many were describing this as a mandate from the American people on the importance of fiscal responsibility (side note: the word mandate is vastly overused in politics these days, the Republicans won back slightly less seats than the statistical average for a party after a jointly owned legislative and executive branch, but I digress).
The key here is the phrase "fiscal responsibility" - it doesn't imply cutting both taxes and spending - it implies taking steps to bring the budget under control. Also notice that the rhetoric during the campaign and after the election reflected that; they were talking about being responsible and bringing the budget under control. This is one of those "universal messages" that doesn't really mean anything. No one disagreed because there was not enough specifics to disagree over. Then came a legislative test during the lame duck session: extending unemployment benefits and extending the "Bush Tax Cuts". (Cuts which, when passed in 2001, turned the budget surplus that Clinton left behind and turned it back into a deficit. Mathematically, passing tax cuts is equivalent to raising spending. The ration of revenue to budget changes either way and Bush was promising money back that was not available in the existing budget.)
Obama was willing to extend the tax cuts for anyone making less than a quarter of a million dollars a year. He was not willing to extend them for the richest portion of America, which would have returned their tax rate back to what it was during Regan's and Clinton's administration (if I remember correctly, I can look for a source if you doubt that claim). Republicans where so staunchly defending the extension of tax benefits for the richest Americans that they were willing to completely stonewall the extension of unemployment benefits. So, the question is: is that fiscally responsible?
Well, the economy is driven mostly by consumer spending. People with large bank accounts do very little to benefit the economy since that money is effectively sitting stagnant. So, in order to stimulate an economic recovery you have to come up with ways to encourage people to spend money: buying products, services, etc. There are many people that don't believe the government should spend money in order to stimulate the economy. This is actually a point that many economists agree on, surprisingly enough... and most feel it's a good idea. The government is one of the few entities that can "afford" to deficit spend and get things moving again. I'm going to assume you agree with this, if you don't then my next argument is still valid, however, since I'm talking about what Republicans presented. Anyway, the question shifts to what is the most effective thing to "spend" money on?
1) Spending money to put dollars in the hands of unemployed people who (potentially) need the money to put food on the table. This proposal was estimated at the time to cost $12.5 billion.
2) Extending tax cuts to keep dollars in the pockets of already rich, employed people. This proposal was estimated to cost over $700 billion. (Note: that amount was just on the contentious >$250,000 portion, not the whole bill.)
The unemployed do not, as a rule, save money. They can't. Any money you give to an unemployed person will generally be spent before the next paycheck. This causes movement of money through the system and keep demand for goods higher than if those people were not able to spend money. This does not create jobs directly, of course, but by increasing demand it give companies an incentive to produce more, which feeds back into them potentially needing more employees.
The rich do not, as a rule, spend money just because they have it. For people making more than $250,000 a year a recession is largely paper losses and not real loses. Any spending these people have to make they will still make and giving them additional money does not encourage spending since they will generally wait until other economic indicators are healthy before they make more investments.
Corporations (which are the majority of "people" making more than $250,000 a year) do not spend money on "essentials" such as food and shelter that people do. Corporations only spend money on raw materials or new employees if they are going to be selling products. Giving a corporation money does nothing to stimulate the economy since that money will not be spent until demand increases. Demand won't increase until consumers have money to spend on that companies products and jobs won't increase until companies are selling products. Therefore, giving money back to corporations does nothing to stimulate the economy, not even indirectly.
Furthermore, Republicans were demanding that Democrats come up with $12.5 billion in funding to offset the costs of the unemployment bill and yet none of them lifted one finger to come up with spending cuts to offset the $700 billion dollar deficit they wanted to create. They did talk about earmarks which, contrary to popular belief, do nothing to reduce spending. They simply designate specific uses for existing spending that was allocated. Even "pork barrel" projects are a tiny portion of the national deficit.
So, Republicans who were claiming to be fiscally responsible blocked legislation that has a proven record of reducing the impact of a recession and contributed very little to the deficit while ramming legislation through that would increase our deficit a tremendous amount. Let me repeat that: The first things the self described "fiscally Responsible" Republicans did after the elections was to increase the deficit.
That is hypocritical.
Eric
PS: By the way, pulling stunts like this and then pointing at Democrats and blaming them for the budget problems isn't hypocritical... it's dishonest.
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