Well...Yeah...

So our Congress in its wisdom raised the debt ceiling yesterday so that we can keep our goverment operational.  Apparently we were slated to run out of cash by the end of the month if they didn't.  The Democrats argued against it uniformly, and several Republicans did, too.  To no avail, obviously.  Of course, we really did have to raise the ceiling because government services do have to continue.  The Republicans were forced into voting for it lest they seem unsupportive of their president's tax cuts.

But in the process, they argued for the tax cuts, and I just don't understand their arguments.  They keep saying that leaving more money in the hands of the people and borrowing more to run the government must be working because hey! look at the low inflation and unemployment rates, and wow! our GDP and productivity numbers have gone up, and whoopee! look at all the small businesses that have popped up, and so on and so on.

Well....Yeah!!!!!!

I could make my finances look great too if I borrowed a boat-load of money.  I could buy a Porsche, hire a cook, invest a bunch and brag about all the interest I'm making on it, and leave a chunk of it in the bank so I can make the payments on the loan for 5 years with no trouble.  That doesn't mean my overall finances are in good shape, though.

No one ever doubted that infusing a bunch of new money (the tax cuts, the borrowed cash) into our economy would hurt the economy in the short run.  It's just that it's so damn irresponsible to continue to increase the debt like that.  I don't even care if you believe (as I do) that the cuts go mostly to the richest Americans, or if you believe that everyone benefits some.  It's still irresponsible to increase the debt and let some future administration have to raise the taxes to pay for it all.

I mean let's face it...a tax cut IS spending even if the administration says otherwise.  The Democrats might be more in favor of "tax and spend", but that's a hell of a lot more responsible than "don't-tax and spend".

Wake up and smell the expensive latte you bought with your loan, guys....it's time to get your financial house in order.

Comments

[caitmcq]

You know, I agree with you and also, in a more general context, suspect our line of reasoning. To make a judgment about large numbers of people on the basis of a parallel situation involving a single person -- what if the situation isn't parallel? What if it's actually analogous, more of a metaphoric relationship? What if the differences aren't just in scale, but in type?

Economics, in particular, has an air of counter-intuitiveness, what little of it I try to grasp.

So, yeah!! But, then, yeah?

[Polymath]

well, i agree that economics is often counter-intuitive. but the stated motive of bush's tax cuts was to stimulate the economy by leaving more money in the hands of consumers and investors. which he did. and that might have been offset by less spending by the government, except that the government didn't stop spending the money that was no longer coming in; they borrowed it instead.

from what i understand about economics, i think the parallel is fairly accurate. there are some people with the theory that if you lower tax rates, the stimulant to the economy will be so great that everyone will make more money, and thus the government can actually make more in taxes than it would have with the higher tax rate. but i'm pretty sure that theory (the laffer curve, if i'm not mistake) has been discredited. and empirically it's simply not true that tax revenues have increased since bush's cuts.

soooo...while i'm not claiming to know a whole ton of economics, everything i've read would imply that my parallel holds to some extent.