Here's an excerpt I rather enjoyed:
Myth #5: The Bush tax cuts are to blame for the projected long-term budget deficits.Fact: Projections show that entitlement costs will dwarf the projected large revenue increases.
The unsustainability of America's long-term budget path is well known. However, a common misperception blames the massive future budget deficits on the 2001 and 2003 tax cuts. In reality, revenues will continue to increase above the historical average yet be dwarfed by historic entitlement spending increases.Read on here. Let me know what you think. I'd rather like to know what a lot of you think of supply-side economics and the Laffer-Curve.
4 comments:
The Laffer Curve actually makes some sense if you start from a high marginal tax rate, such as the 91 percent top income tax bracket of the Eisenhower administration. However, trickle-down economics became a national joke because Republicans got the idea that lowering taxes always increases revenue. That's insane.
As for the deficit-creating effect of the Bush tax cuts for the rich, I invite you to read this analysis by The Center on Budget and Policy Priorities.
The 91% tax rate is practically meaningless without accounting for the tax base. Prior to 1986, the tax base was much narrower. Passive investment losses could be deducted from ordinary income. Non-mortgage interest was still deductible. The 1986 TRA was revenue-neutral even though the rates were significantly reduced.
To say the deficit is driven primarily by revenue losses ignores the fact the annual federal spending has increased by $1 trillion in just three years, from $2.7 trillion to 3.7 trillion. Also, OMB's own forecast shows that federal revenues will exceed the historical 18% average even if most of the Bush tax cuts are renewed which Obama plans to do.
Spending cuts ought to begin with the Pentagon. There is no reason why USA military spending should exceed that of every other country combined. Then we ought to cut the out-of-control spending on surveillance, especially domestic surveillance in violation of the 4th Amendment.
Other suggested cuts-- subsidies for corporations, especially the oil and gas industry and the nuclear power industry.
We should cut subsidies for wind and solar as well. Per MW-hr, wind and solar subsidies are about 50 times greater than subsidies for coal, according to the Energy Information Administration.
I should also point out that the budget debt is going to reach $20 trillion even if Obama lets the Bush tax cuts for the rich expire.
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