How do Republicans justify our huge fiscal deficit?
True conservatives ought not want to have us in dette to China forever. Why, in fact, should there be any federal deficit at all?
- 1 decade agoFavorite Answer
Have you ever heard anything as stupid as PNAC Penelope's poor excuse for this RECORD deficit that will take our grandchildren most of their lives to pay for ?
Why don't they tell us what Bush did with the surplus he was handed and where did the money spent on Bush's 9 trillion dollar deficit go??
All these republicans say Reagan was so good
well Bush is just like him in the following regard
What do you do when you want to screw only the working people of your nation with the largest tax increase in history and hand those trillions of dollars to your wealthy campaign contributors, yet not have anybody realize you've done it? If you're Ronald Reagan, you call in Alan Greenspan.
Through the "golden years of the American middle class" - the 1940s through 1982 - the top income tax rate for the hyper-rich had been between 90 and 70 percent. Ronald Reagan wanted to cut that rate dramatically, to help out his political patrons. He did this with a massive tax cut in the summer of 1981.
The only problem was that when Reagan took his meat axe to our tax code, he produced mind-boggling budget deficits. Voodoo economics didn't work out as planned, and even after borrowing so much money that this year we'll pay over $100 billion just in interest on the money Reagan borrowed to make the economy look good in the 1980s, Reagan couldn't come up with the revenues he needed to run the government.
Coincidentally, the actuaries at the Social Security Administration were beginning to get worried about the Baby Boomer generation, who would begin retiring in big numbers in fifty years or so. They were a "rabbit going through the python" bulge that would require a few trillion more dollars than Social Security could easily collect during the same 20 year or so period of their retirement. We needed, the actuaries said, to tax more heavily those very persons who would eventually retire, so instead of using current workers' money to pay for the Boomer's Social Security payments in 2020, the Boomers themselves would have pre-paid for their own retirement.
Reagan got Daniel Patrick Moynihan and Alan Greenspan together to form a commission on Social Security reform, along with a few other politicians and economists, and they recommend a near-doubling of the Social Security tax on the then-working Boomers. That tax created - for the first time in history - a giant savings account that Social Security could use to pay for the Boomers' retirement.
This was a huge change. Prior to this, Social Security had always paid for today's retirees with income from today's workers (it still is today). The Boomers were the first generation that would pay Social Security taxes both to fund current retirees and save up enough money to pay for their own retirement. And, after the Boomers were all retired and the savings account - called the "Social Security Trust Fund" - was all spent, the rabbit would have finished its journey through the python and Social Security could go back to a "pay as you go" taxing system.
Thus, within the period of a few short years, Reagan dramatically dropped the income tax on America's most wealthy by more than half, and roughly doubled the Social Security tax on people earning $30,000 or less. It was, simultaneously, the largest income tax cut in America's history (almost entirely for the very wealthy), and the most massive tax increase in the history of the nation (which entirely hit working-class people).
But Reagan still had a problem. His tax cuts for the wealthy - even when moderated by subsequent tax increases - weren't generating enough money to invest properly in America's infrastructure, schools, police and fire departments, and military. The country was facing bankruptcy.
No problem, suggested Greenspan. Just borrow the Boomer's savings account - the money in the Social Security Trust Fund - and, because you're borrowing "government money" to fund "government expenditures," you don't have to list it as part of the deficit. Much of the deficit will magically seem to disappear, and nobody will know what you did for another 50 years when the Boomers begin to retire 2015.
Reagan jumped at the opportunity. As did George H. W. Bush. As did Bill Clinton (although Al Gore argued strongly that Social Security funds should not be raided, but, instead, put in a "lock box"). And so did George W. Bush.
The result is that all that money - trillions of dollars - that has been taxed out of working Boomers (the ceiling has risen from the tax being on your first $30,000 of income to the first $90,000 today) has been borrowed and spent. What are left behind are a special form of IOUs - an unique form of Treasury debt instruments similar (but not identical) to those the government issues to borrow money from China today to fund George W. Bush's most recent tax cuts for billionaires (George Junior is still also "borrowing" from the Social Security Trust Fund).
Former Bush Junior Treasury Secretary Paul O'Neill recounts how Dick Cheney famously said, "Reagan proved deficits don't matter." Cheney was either ignorant or being disingenuous - it would be more accurate to say, "Reagan proved that deficits don't matter if you rip off the Social Security Trust Fund to pay for them, and don't report that borrowing from the Boomers as part of the deficit."
- Anonymous1 decade ago
The Republicans philosophy (from Reagan through Bush Jr) has been taht all we have to do is convince you to vote for us every 4 years and then we and our supporters get to feed at the trough for 4 years.
You have to understand that the conservatives hate the whole concept of a strong federal government and therefore see no problem with weakening the government with a debt burden that will never be paid off. The ruling class they represent would liek nothing more than bankrupting the government. Without the safety nets that the government provides the majority of us not fortunate to already be multimillionaires will be at the mercy of the mega wealthy.
Conservatives wish to see the government not as a going concern but as a temporary inconvenience.
- 1 decade ago
As the elephant circles the drain, so do the eternally ignorant who answer these questions...When even China is running with their money; and now the banks of the world have to chip in; when even Warren Buffett has run with his money; when Walmart says they are noticing the middle class no longer has money to spend; when people are losing homes at record numbers as their house values drop...when will Americans realize that blaming Clinton, blaming liberals, blaming conseratives, blaming the boogie man is not going to get them out of this mess easily....and NEVER under the man who created this boondoggle while leading the most deceptive lying regime ever in the United States.
- madd texanLv 61 decade ago
What's stupid about the fact that the treasury receipts have gone up since the tax cuts? It worked when Kennedy did it, worked when Reagan did it, and has worked thus far.
And as far as the "surplus" that Clinton left for Bush, that's insane. It never was an actual surplus. It was a PROJECTED surplus. Projected means it SHOULD happen no it WILL happen. Did you forget about the attack in 2001 that was meant to cripple the US economy?
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- Anonymous1 decade ago
I guess you are a "true conservative" in order to know what one would or wouldn't do?
Got news for you, just because you don't like what's going on doesn't mean you know anything about it. The little tiny bit the general public knows is just a drop in the bucket to what the government knows but then, if you had joined the military you'd know that.Source(s): US Marines 76-77
- 1 decade ago
ask FDR we have had one ever since his progressive spending habits matched his drinking habits.
BTW social program spending out numbers defense dept spending by 4x. Welfare and the war on poverty has created more poverty and deficits. Democrats have been throwing money at it since LBJ and the problem gets worse. Before welfare poverty was lower and so was the deficit.
- PNAC ~ PenelopeLv 41 decade ago
Since The President's Tax Relief Was Implemented, Record Levels Of Tax Revenue Have Helped Us Toward Our Goal Of Balancing The Budget By 2012. Receipts have increased nearly 37 percent in the last three years, and the deficit is on track to decline by $205 billion in the same time period. The President's FY 2008 Budget lays out a plan to continue this deficit reduction while keeping taxes low, leading to a surplus in 2012 of $33 billion.
- 1 decade ago
You mean our huge fiscal deficit that has been shrinking since George W. Bush cut our taxes? Gee, I have no problem justifying that at all.
- 4 years ago
Because taxes are dead money taken out of an economy like a leech. This results in fewer jobs and economic growth.
- firewomenLv 71 decade ago
What happens to your checkbook if you keep running a deficit. You run out of money and eventually people stop paying you or lending you money. You max out credit cards and any good will you had. Eventually people avoid you and learn not to trust you. you end up with nothing, out on the street and no friends, all because you couldn't control your spending.