Big Lizards:Blog:Entry “The Only Three Certainties In Life...”

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December 9, 2005

The Only Three Certainties In Life...

Hatched by Dafydd

...Are death, taxes, and that Democrats will call tax cuts "spending increases."

Here's some good news if ever I heard any:

House Passes 3 Tax Cuts, Plans a 4th
Cost Would Outstrip Recent Action on Deficit

By Jonathan Weisman
Washington Post Staff Writer
Thursday, December 8, 2005; A01

The House passed three separate tax cuts yesterday and plans to approve a fourth today, trimming the federal revenue by $94.5 billion over five years -- nearly double the budget savings that Republicans muscled through the House last month.

GOP leaders portray the tax bills -- for the hurricane-ravaged Gulf Coast, affluent investors, U.S. troops serving in Iraq and taxpayers who otherwise would be hit by the alternative minimum tax -- as vital to keeping the economy rolling....

The three measures passed overwhelmingly, with virtually all Democrats voting with Republicans, and with hardly a mention of their impact on the deficit, which is projected to reach $331 billion in fiscal 2006 and remain above $300 billion a year through the end of the decade, when most of Bush's tax cuts are set to expire. The Senate has already passed similar measures, indicating that all the measures are likely to become law.

Now, if you were Dr. Sinister, Professor of Liberal Economics, how would you portray this early Christmas present to the American taxpayer? Oh, of course....

But some budget analysts say the flourish of tax cutting badly undermines the recent shows of fiscal discipline. Last month's budget-cutting bill would save $50 billion over five years by imposing new fees on Medicaid recipients, trimming the food stamp rolls, squeezing student lenders and cutting federal child support enforcement.

"I don't think it makes any sense to go through all the difficulty they just went through with the budget-cutting bill, then give it all back in tax cuts," said Robert L. Bixby, executive director of the Concord Coalition, a nonpartisan budget watchdog group. "If they want to cut taxes, fine, but they are going to have to cut spending by at least that much to help the deficit, and clearly they are not willing to do that. They have to start looking reality in the face."

"Nonpartisan?" Ear-ache, my eye!

Since it's demonstrable that the economy has flourished since Congress enacted the Bush tax cuts of 2001 -- before 9/11, by the way -- how exactly do lefties manage to spin this as bad news? Take a look:

Although the federal tax revenue has grown since the passage of the 2003 tax cuts -- from $1.9 trillion in 2004 to $2.1 trillion in 2005 -- the tax revenue measured against the size of the economy remains below the 2002 level and well below the level of 2001, when the first of Bush's five tax cuts was passed. "The argument that tax cuts will grow the economy and pay for themselves is very attractive, but it's just not true," [Maya MacGuineas, president of the Committee for a Responsible Federal Budget] said.

All right, please sit down for this, because you will fall over in a dead faint when I translate what she just said. We're doing bad economically because the federal revenues are a lower percent of GDP than they were during the depths of the recession. Got it?

In other words, if the gross domestic product of the United States had only grown at a lower rate -- so that the revenues collected were a larger percentage of that lower GDP -- then we would be better off. Contrariwise, had the GDP skyrocketed at 7% or 10% per year (an unheard of growth rate in modern times), so that the GDP was significantly higher than it is now... then we would be much, much worse off, according to Maya MacGuineas and the Committee for a Responsible [!] Federal Budget.

And there you have it: Econ. 101 in the topsy-turvy world of Democratic finance.

Hatched by Dafydd on this day, December 9, 2005, at the time of 2:44 AM