Republicans are trying ferociously to hang on to the obscenely low tax rates paid by the party’s wealthy benefactors and corporate puppeteers. So, newspapers and cable are filled with counter GOP demands for massive spending cuts that would almost entirely hurt the poor, the working poor, the tattered remains of the middle class and the elderly.
Yet this is much ado about nothing. Even Paul Ryan – as dimwitted a budget “guru” as the Republican Party has had since Mitch Daniels – knows it. Not only is the so-called deficit a fake issue that exists only because of the Republican-caused recession but US debt as a percent of GOP is much lower than in most of the industrialized world.
It is time for Republicans to stop yammering about the deficit and debt, and time for Democrats – especially Pres. Obama – to call them out on it.
There are countless reasons why the deficit and debt is a non-issue for everyone but heat-seeking Republican missiles. Prime among them is the reality that when the federal government borrows money, it’s free cash.
When Treasury borrows money today, it does so at historically low rates. In fact, when inflation is put to the calculation, it turns out that Washington pays an effective negative interest rate. Put bluntly, people are paying the federal government to hold their cash.
Beyond this, America’s debt as a percent of Gross Domestic Product (GDP) is not only manageable, it is a lot lower than in the rest of the industrialized world. According to the CIA World Factbook, at 67% America is in much better shape than nations generally thought of as “fiscally sound” and healthy. In descending order, the US is far down the list:
- Japan (205% – almost as great as first place Zimbabwe, 219%)
- Singapore (118%, and the city state has almost no social safety net)
- Belgium (98%)
- Canada (87%)
- France (86%)
- United Kingdom (85%)
- Germany (81%)
None of these nations have their Parliament’s locked in a death star battle over the size of the national debt.
And what are some of the countries with a lower debt-to-GDP ratio than America? Nations with “booming” economies such as Ethiopia, Iran, Russia, Pakistan, Syria and Yemen. Would Republicans like the US economic outlook to mirror any of these?
There are three simple reasons why the US debt is as large as it is: The Bush tax cuts, the Iraq and Afghan wars, and runaway health care costs. Yet Republicans want to continue the first two, and are still trying desperately to block the Affordable Care Act from dealing with the third.
The GOP is as phony as a three dollar bill.
During the election campaign, the entire GOP ticket – from Mitt Romney down through every Congressional candidate – screamed that the deficit soared under Pres. Obama. It did, but only because of the Bush recession.
During any recession government collects less in tax revenue and spends more on safety net items including unemployment insurance, food assistance, Medicaid and other measures designed to help citizens who fall into the crevice. In 2006, about the healthiest economic year of George W. Bush’s eight years in office, what the federal government took in represented about 17.7% of GDP; what it paid out hit 20% of the economy according to figures compiled from the CBO monthly budget review (see chart).
For 2009, in the depths of the recession, receipts dropped to less than 15% while government outlays soared to one-quarter of GDP.
So far this year, as the economy continues to recover, receipts have inched their way back to just under 16% of GDP while outlays have fallen to under 23%. An anemic improvement but the US economy is hardly robust.
Meanwhile, the United States spends more on defense than the rest of the world combined, and more on health care per capita with poorer results and less on social assistance than any other Western nation. If the Pentagon’s budget were cut by 30% over the next five-to-10 years, America would still have a larger military than the rest of the globe put together and remain capable of wiping out the planet several times over.
We could drastically cut unemployment benefit and other assistance payments if Congress gave the nation the massive jobs bill that it needs.
Finally, the top tax rates should be increased for 10 years by the amount that they were cut under Bush or 39.6% for top earners. To be totally fair, the 4.6% that was borrowed from China to give millionaires their tax cuts could be added in as well. It would produce a top tax rate of 44.2%. Doing so is politically impossible but it would be a step in the right direction.
Author and journalist Charley James’ next book is about his experience becoming homeless. When published, Charley will donate a percentage of his advance and royalties to homeless organizations.
Follow Charley on Twitter @SuddenlyHomeles. Posted: Saturday, 22 September 2012 Charley’s next book is about his experience being homeless. When published, he will donate a percentage of his royalties to homeless organizations.
Published: Friday, 14 December 2012