Congratulations! You are now the proud parents of a bouncing $7.4 trillion debt. That comes out to just about $25,195 for every man, woman and child in America.
Oh yes, and the federal deficit -the gap between Washington's spending and its income this year -- has risen to an historic high of $374.2 billion. You might say that Congress is hemorrhaging red ink.
So what are our elected representatives in Congress doing about America's precarious fiscal balance sheet? Are they exercising the discipline necessary to ensure that our children and grandchildren won't get stuck with the bill for the most irresponsible spending binge in American history?
Don't be silly. There's an election next month. So, naturally, Congress is rushing to put the finishing touches on a bill to give $145 billion worth of tax cuts to big corporations and tobacco growers.
Why? Call it payback for generous campaign donations. Call it shameless vote buying. Call it anything but responsible public policy-making.
"This legislation is an early Christmas gift for corporate fat cats," Keith Ashdown, vice president for Taxpayers for Common Sense, told The New York Times this week.
Chief beneficiaries of the tax bill, which passed in the House on Wednesday and is expected to clear the Senate by the weekend, include such corporate giants as General Electric, Exxon Mobil, Starbucks, Hewlett-Packard, Eli Lilly, CSX railroad, utility companies, agribusiness and many others.
Just how many others is impossible to say. The bill is 633 pages long. And it has been written in such grab-bag fashion that few if any members of Congress really know exactly what's in it.
As The Times artfully put it on Thursday: "With hundreds of business lobbyists circling the House-Senate negotiations this week, lawmakers inserted so many subtle last-minute changes in wording that it will take weeks if not months for even the most skilled tax experts to identify all the deals that took place."
Some dissidents in the Senate were talking about a filibuster. And killing this gigantic pork-barrel bill would clearly be the best course, even though the original version was deemed necessary to head off a trade war with Europe. But members of the Senate have to get re-elected, too, so that's not likely to happen. (For instance, Senate Democratic Leader Tom Daschle, D-S.D., is locked in a tough election battle back home and needs the ethanol tax breaks in the bill to get the corn-farmer vote, so he won't support the filibuster.)
This bill began as a corrective measure to repeal a tax break to American exporters that was invalidated under the treaty creating the World Trade Organization. In its original form, it would have cost just $5 billion in taxes, and it would have gotten rid of retaliatory tariffs imposed in Europe on 1,600 American manufactured products. But any tax bill quickly becomes a "Christmas tree," with new tax breaks added like decorative ornaments.
So here comes the latest round of tax breaks, and just in time for the election. And why not? Our elected senators and representatives in Congress are telling us that we can have it all -- record high spending and tax cuts galore. And if we can't trust them, who can we trust?
Ay, jesus... This is insane. We can't pay the debt off, don't look like to be able to in the future with our productivity in decline, and even if we could someday -- should we? I can't begin to imagine the ridiculous inflation that would cause. We'd need to pay this out over the long term, which means accumulating Clinton-esque surpluses and hoping the interest alone doesn't eat everything we've saved.
Deficit spending's a short-term tool for invigorating a tired economy, not a crutch. Argh. Though on the plus side, this at least makes it remarkably easy to laugh bitterly at fiscal conservatives proclaiming their love for Bush. Say what stereotypes you will about Democrats and social programs, but for the past how many decades the country's performed better and been handled more responsibly (not that this is a huge hurdle to leap) under Democratic control.
posted
That's a really high number, and it's a little disturbing to think that every man, woman, and child "owes" that much. However, when you take the debt as a percentage of GDP it has been far higher in the past, or so says the U.S. Treasury Dept. In fact, according to this Wikipedia article on the national debt, the debt during World War II was 125% of GDP, and the U.S. debt as a percentage of GDP is lower than the debt of many other developed nations.
I think the problem isn't so much the size of the debt. It's the rate that the debt is growing.
Posts: 3546 | Registered: Jul 2002
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posted
Lalo, I'm sure the theory is that our low productivity is resulting from high taxation and misplaced or overtight regulation. I don't buy it--I don't think the evidence supports it--but it is a possible situation a country could be in, and it happens to benefit the largest bloc of Republicans, so naturally they want to believe it. (I doubt it's purely and solely self-interest, although that's undoubtedly a factor. After all, if the economy tanks completely, the more intelligent fat cats know they will go down with it.) I'm sure there are nations that could cut tax rates and obtain higher revenue, even though I don't think we're among them.
It could be argued, moreover, that if there's no hope of paying off the debt there's no point in trying. I would hate for us to do it, but nations have repudiated debts before.
Posts: 1114 | Registered: Mar 2004
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posted
As the deficit and national debt continues to mount, I am struck by what I read earlier this year. He (an economist) said that tax cuts without corresponding spending cuts are just taxes deferred, with interest, onto the backs of future taxpayers. Sorry I don't have a source for this, but it makes sense to me.
Posts: 6316 | Registered: Jun 2003
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