GOP's brilliant debt-shrinking idea: Cut taxes on the rich
April Fool's Day was last week, right? In which case, what the...?
The ambitious plan, drafted principally by Representative Paul D. Ryan, the Wisconsin Republican who chairs the Budget Committee, proposes not only to limit federal spending and reconfigure major federal health programs, but also to rewrite the tax code, cutting the top tax rate for both individuals and corporations to 25 percent from 35 percent, reducing the number of income tax brackets and eliminating what it calls a "burdensome tangle of loopholes."
Putting aside for now the fact that the GOP also seeks brutal cuts on America's poor and working class, the idea that more tax cuts for the rich are part of any deficit-cutting plan is....well, as Rocky the Squirrel always said, "That trick never works."
Ronald Reagan tried it, and took the United States from a creditor nation to a debtor nation while incurring more debt than all of the American presidents who came before him, combined. Bill Clinton raised top marginal taxes on the wealthy to what seemed like a rational level (still much lower than what it had been for the first six years of Reagan's presidency) and ran budget surpluses during a booming economic time. George W. Bush reversed course again and cut taxes for the wealthy while waging two wars overseas, and ushered in a new golden era of red ink.
Congressional Budget Office data show that the tax cuts have been the single largest contributor to the reemergence of substantial budget deficits in recent years. Legislation enacted since 2001 added about $3.0 trillion to deficits between 2001 and 2007, with nearly half of this deterioration in the budget due to the tax cuts (about a third was due to increases in security spending, and about a sixth to increases in domestic spending). Yet the President and some Congressional leaders decline to acknowledge the tax cuts' role in the nation's budget problems, falling back instead on the discredited nostrum that tax cuts "pay for themselves."
As for corporatiions -- 35 percent probably is too high, for the handful of chump CEOs dumb enough to pay at or close to that rate. Most pay far less -- have you already forgotten the curious case of General Electric? The bottom line is that corporate taxes contribute much less to the federal coffers than they did back in the 1950s, which was a golden era for America and its economy.
And yet, here we go...again. I think Atrios said it better than I could:
Republicans don't care about the deficit. They care about tax cuts for rich people, and some of them are also feudal sadists who want poor people to suffer. But mostly they care about tax cuts for rich people. That's it. Any deficit cutting, real or imagined, is there to pave the way for even more tax cuts for rich people.