America’s financial troubles are always framed in politics. It’s the other guys’ fault and everything would be better if they listened to us—reasoning heard from both sides of the aisle.
Most of the talk heard from Washington is about the reckless spending of the Obama administration. Spending must be reined in. The budget must be balanced. Medicare must end and Social Security taken to the private sector.
Those voices ignore the reality of the past decade. Policy changes enacted in the previous administration cost $5.07 trillion, with deficit budgets in every single year of the two Bush administrations. On the other hand, Obama’s policies, including projections to 2017, total $1.44 trillion. It’s merely politics when there’s now such concern about spending and deficits.
When examining the policy costs—when trying to ascertain why the deficit has become so deep—there’s one factor that easily outpaces all the others: the Bush-era tax cuts. Or as writer James Fallows suggests, call them the “Obama-Extended Tax Cuts” if you insist on making it political, but to ignore those tax cuts puts an impenetrable barrier in the way of solving the deficit.
Contrary to the complaints about high taxes, corporations and wealthier Americans pay a smaller percentage of taxes than most developed countries, and by far the smallest percentage in decades. There are large corporations making record profits that pay little or no taxes, and some even receive a refund because of clever off-shore banking techniques.
We’ve rather fond of the American policy of helping out our elderly citizens through Medicare and Social Security. We enjoy the many services provided to citizens through taxes—so much of what makes America what it is.
The tax cuts from 2001 and 2003, and extended in the Obama administration, have proven devastating to the financial well-being of the country. The deficit won’t be tamed only by cutting spending here and there. It’s the tax cut policy that has to change. Let the cuts expire.