Sunday, September 19, 2010

The Bush Tax Cut Expirations: ‘It's Just A Flesh Wound!’



It increasingly appears as if the Democrats in Congress and in the White House are going to cave, once again, to the siren call of lower taxes and are going to extend the Bush Tax Cuts for at least a year…and perhaps longer.

Democrats, for the time being, control both elective branches of our government in Washington. This new trumpet blast of ‘tax freedom!’ is coming from the very same party, the Democrats, who lambasted and excoriated the Bush Administration and the GOP Congress for passing the ‘terrible’ W tax cuts in the first place!

What in the name of King Arthur is going on here?

It is getting to the point where a voter can't even count on President Obama, Nancy Pelosi and Harry Reid killing the 'awful' Bush tax cuts that the Republicans themselves decided to let expire at the end of this year when they passed them in the first place!

The hypocrisy and the demagoguery are astoundingly mind-numbing.

We are very much on record as being for a much smaller government with far lower levels of spending. We will stand toe-to-toe and arm-in-arm with anyone who advocates such a ‘limited government’ role, although so far, we could not play Red Rover/Red Rover with enough Members in Congress who actually would vote the same way.

We don’t like paying higher taxes any more than you do.

But we fear that the drive for lower taxes is ALWAYS presented as an incomplete thought by politicians nowadays. You never hear someone say, on either side or in the Tea Party: ‘Let’s extend the Bush Tax Cuts….AND pay for it by doing something dramatic, like, let’s say, increase the retirement age for SS and Medicare to 70 tomorrow morning!’

The Bush Tax Cuts being extended for a decade are estimated to ‘cost’, in CBO budget-scoring terms, about $3.5-$4 trillion dollars. Raising the retirement age to 70 for both of the two Atlases of federal entitlement spending would save approximately $5.4 trillion over the same time period.

It would essentially be a ‘wash’ in terms of deficit-spending. It would also mean that the national debt would NOT swell by another $5 trillion or so without either the Bush tax cuts expiring or the retirement ages being raised immediately.

And if we do both, we would avoid incurring about $10 trillion more in new debt. $10 Trillion with a 'T'.

Wouldn’t your kids be thankful for that!

One of our favorite movies of all time is Monty Python’s ‘Search for the Holy Grail’. The best scene is where the Black Knight stubbornly fights King Arthur as he is being dismembered limb by limb. After one such amputation, King Arthur tells him he has lost a another arm and should surrender in battle. To which the Black Knight looks at his now-armless shoulders and says: 'It's just a flesh wound!’

A wizened friend of ours looks at the Bush Tax Cuts expiration this way:

‘The expiration of the Bush tax cuts at the end of this year would wind up being a ‘flesh wound’ to the people who pay them. They can always be reduced or repealed. On the other hand, our chronic inability to close these yawning deficits and accumulate a $24 trillion national debt as projected without the expiration of the Bush tax cuts and/or spending reductions of a similar amount will cause a cardiac infarction of irreparable damage proportions'

Imagine the Black Knight falling over dead due to a heart attack in the middle of his battle with King Arthur. That is what happens to republics, democracies, empires and kingdoms over the ages where their leaders, elected or appointed by Divine Right, do stupid things like continue to spend as if there is no tomorrow and never pay off their debts. Remember the good ole Qing Dynasty, the Habsburgs or even the U.S.S.R? All done in by empty coffers in the treasury to pay the bills. see Barron’s ‘The Road to Fiscal Ruin’)

Well, all is not too dismal on the fiscal front, is it? It looks like there is a Tea Party Express barreling over the national landscape and with those new leaders coupled with the old-guard Republicans, we are surely going to find some fiscal discipline, won’t we?

Not unless you start hearing some of these new leaders say the following:

‘I support the Bush Tax Cuts being made permanent in the US tax code. That will give individuals and business some certainty to plan for the future and make productive investments and plans.

However, I also want to pay for them in terms of deficit-reduction by [raising the retirement age for Medicare and Social Security to 70 overnight…choose your own spending cut equivalent of $3.5-$4 trillion]. That way, we won’t load up any more debt on our children and loved ones behind us and follow the Qing Dynasty into the trash heap of history.’

Let us know when you find a new leader who is saying such things because then you will truly know that a ‘new day of common sense and rational thought-processes’ has returned to America The Beautiful.

Or else we'll find ourselves all chopped up like the Black Knight one day.

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