Does Anyone Have Any Doubt?

Part of the problem is the disconnect between the people and their government... Natural considering we have no democracy... Instead of having it imposed upon us without choice we could all choose what we would support and what we would not, and then, certainly, a lot of stuff would go to hell, and a lot of people would be on their own... We all might concede the need for a common defense, and general welfare... There are some things better done together, and no relationship is real without a common sacrifice....

The NYT's provided a good service in showing the wonderful things that could be done with $60 B a year, the one-year cost of tax cuts for the wealthy. Here is an interesting analysis.


60 Billion in Tax Cuts: The Real Cost
By Robert Borosage

December 5, 2010 - 8:35am ET


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David Leonhardt in the NYT does a good service by laying out simply what $60 billion a year in tax cuts -- the amount that will go to those earning over $250,000 if the Republicans get their way (adding to their income an average of $25,000 per household -- with most of that going in far larger sums to multimillionaires)

http://www.nytimes.com/2010/12/05/weekinreview/05numbers.html

(I've changed the order and eliminated some)

•Universal preschool for 3- and 4-year-olds, with relatively small class sizes.

•Free college, including room and board, for about half of all full-time students, at both four- and two-year colleges.

A national infrastructure program to repair and upgrade roads, bridges, mass transit, water systems and levees.

•As much deficit reduction as the elimination of earmarks, President Obama’s proposed federal pay freeze, a 10 percent cut in the federal work force and a 50 percent cut in foreign aid — combined.

•A tripling of federal funding for medical research.

•Twice as much money for clean-energy research as suggested by a recent bipartisan plan.

•A $500 tax cut for all households.

Can anyone with a straight face and a decent heart actually stand up and say it is better to give this money to the affluent than to provide high quality pre-school to every child?

No, but defenders of the top end tax cuts are not called upon to do that. Becuase neither the president nor the Democrats in Congress are making this case.

This is why we need independent communications capacity for progressives inside and outside the Congress. Otherwise the sensible alternatives are excluded without ever being heard, much less considered.

Let’s Not Make a Deal
By PAUL KRUGMAN
Published: December 5, 2010

Back in 2001, former President George W. Bush pulled a fast one. He wanted to enact an irresponsible tax cut, largely for the benefit of the wealthiest Americans. But there were Senate rules in place designed to prevent that kind of irresponsibility. So Mr. Bush evaded the rules by making the tax cut temporary, with the whole thing scheduled to expire on the last day of 2010.

The plan, of course, was to come back later and make the thing permanent, never mind the impact on the deficit. But that never happened. And so here we are, with 2010 almost over and nothing resolved.

Democrats have tried to push a compromise: let tax cuts for the wealthy expire, but extend tax cuts for the middle class. Republicans, however, are having none of it. They have been filibustering Democratic attempts to separate tax cuts that mainly benefit a tiny group of wealthy Americans from those that mainly help the middle class. It’s all or nothing, they say: all the Bush tax cuts must be extended. What should Democrats do?

The answer is that they should just say no. If G.O.P. intransigence means that taxes rise at the end of this month, so be it.

Think about the logic of the situation. Right now, the Republicans see themselves as successful blackmailers, holding a clear upper hand. President Obama, they believe, wouldn’t dare preside over a broad tax increase while the economy is depressed. And they therefore believe that he will give in to their demands.

But while raising taxes when unemployment is high is a bad thing, there are worse things. And a cold, hard look at the consequences of giving in to the G.O.P. now suggests that saying no, and letting the Bush tax cuts expire on schedule, is the lesser of two evils.

Bear in mind that Republicans want to make those tax cuts permanent. They might agree to a two- or three-year extension — but only because they believe that this would set up the conditions for a permanent extension later. And they may well be right: if tax-cut blackmail works now, why shouldn’t it work again later?

America, however, cannot afford to make those cuts permanent. We’re talking about almost $4 trillion in lost revenue just over the next decade; over the next 75 years, the revenue loss would be more than three times the entire projected Social Security shortfall. So giving in to Republican demands would mean risking a major fiscal crisis — a crisis that could be resolved only by making savage cuts in federal spending.

And we’re not talking about government programs nobody cares about: the only way to cut spending enough to pay for the Bush tax cuts in the long run would be to dismantle large parts of Social Security and Medicare.

So the potential cost of giving in to Republican demands is high. What about the costs of letting the tax cuts expire? To be sure, letting taxes rise in a depressed economy would do damage — but not as much as many people seem to think.

A few months ago, the Congressional Budget Office released a report on the impact of various tax options. A two-year extension of the Bush tax cuts, it estimated, would lower the unemployment rate next year by between 0.1 and 0.3 percentage points compared with what it would be if the tax cuts were allowed to expire; the effect would be about twice as large in 2012. Those are significant numbers, but not huge — certainly not enough to justify the apocalyptic rhetoric one often hears about what will happen if the tax cuts are allowed to end on schedule.

Oh, and what about confidence? I’ve been skeptical about claims that budget deficits hurt the economy even in the short run, because they undermine confidence in the government’s long-run solvency. Advanced countries, I’ve argued, have a lot of fiscal leeway. But anything that makes permanent extension of obviously irresponsible tax cuts more likely also sends a strong signal to investors: it says, “Hey, we aren’t really an advanced country; we’re a banana republic!” And that can’t be good for the economy.

Last but not least: if Democrats give in to the blackmailers now, they’ll just face more demands in the future. As long as Republicans believe that Mr. Obama will do anything to avoid short-term pain, they’ll have every incentive to keep taking hostages. If the president will endanger America’s fiscal future to avoid a tax increase, what will he give to avoid a government shutdown?

So Mr. Obama should draw a line in the sand, right here, right now. If Republicans hold out, and taxes go up, he should tell the nation the truth, and denounce the blackmail attempt for what it is.

Yes, letting taxes go up would be politically risky. But giving in would be risky, too — especially for a president whom voters are starting to write off as a man too timid to take a stand. Now is the time for him to prove them wrong.

Wasn't there some kind of significant event or other, back in 2001 that seemed to have a negative impact on the economy and stock markets?