Tax cuts, unemployment and the deficit

07.12.10 - 1:12 pm | Tim Redmond |

(10)

Fifty-five thousand people a day are losing their unemployment insurance because Congress won't extend benefits. Why? Well, gee, any federal spending will increase the deficit -- and like Herbert Hoover, everyone in Washington is talking about cutting deficits.

But check out this handy chart from the Commitee on Budget and Policy Priorities (thanks, Calitics). The overwhelming factors in the current budget deficit are left over from the Bush administration: Two wars, massive tax cuts for the rich, and an economic meltdown. Unemployment insurance barely even counts.

So the obvious solution to the deficit problem is to get the hell out of Iraq and Afghanistan, cut the size of the military and end the tax cuts. Funny: The deficit hawks aren't talking about any of those things.

Economy

Comments

I agree get out of the war

I agree get out of the war for political reasons, but by that graph, the war is not a big factor.

The graph does not show how continuing the unemployment benefits will effect the deficit, unless they are counted as part of Bush era tax cuts.

Although unlike what seems like the rest of the world I am not so worried about the deficit, but who gives a shit what I think.

Posted by Chris Pratt on Jul. 12, 2010 @ 1:59 pm

I am just tired of all the

I am just tired of all the crap, the politics, whatever. You know since I lost my job back in Aug. 09 I have been trying to get on my feet everyday and nothing. I have applied to at least 5 jobs a day. Something is wrong i mean really wrong. The people in this world need to stand up and fight, and I mean fight because its just going to keep going downhill until something happens. Hey and if you do get arrested just think you have a roof over your head 3 meals a day. Fight People Stand Up

Posted by Guest on Jul. 12, 2010 @ 2:49 pm

The Bush-era tax cuts are expiring next year

So they will no longer count as a contributing factor in the deficit.

Posted by Lucretia Snapples on Jul. 12, 2010 @ 3:00 pm

Yes, Lucretia, unless they

Yes, Lucretia, unless they are renewed, as some in Congress want.

Posted by tim on Jul. 12, 2010 @ 5:03 pm

Deficit

The deficit is out of control for many reasons, and that is a trend that has been going on for nearly 100 years. Every President is to blame and Bush and Obama made it much worse in slightly different ways.

The UI issue is a drop in the bucket, as tim notes. But the bucket is already leaking and the much bigger question is not "How can we spend even more?" but "How the hell are we going to pay for this mess?"

If Tim has an idea (other than "tax the rich", blah blah), then i think that is the debate we need to have.

Meanwhile, there are plenty of jobs out there if folks are willing to drop their standards or relocate.

Posted by Folly on Jul. 12, 2010 @ 8:35 pm

Keynesianism

Unless you've got any better ideas, it is clear that the counterintuitive action of massive deficit spending is the only way for a sovereign, the economics of which bear no resemblance to your kitchen table budget, to bootstrap future economic growth.

Had the Republicans not bailed out the investment banks in 2008, then they would be winding their way through bankruptcy proceedings right about now, their shareholders would have been wiped out, housing prices would have fallen, and we'd be climbing our way back out of the speculative hole with the speculators permanently marginalized.

But no, the choice was made to double down on stupid, to ensure that corporate welfare ruled, to increase war spending, and to begin an all out class warfare assault on social security and health care by "outsourcing" responsibility onto the individual to provide Wall Street investment houses and insurers with reliable cash flows.

The door has closed on financial sector bankruptcy as a viable option, too much moral hazard has been tolerated in the interim. There was no risk aversion in the speculative bubble that led to this crisis, but all of a sudden, when it comes to bailing out those who did not cause the bubble but were injured as it popped, risk aversion rules the day.

This, with Democrats controlling both houses of Congress. It is as if Obama, Reid and Pelosi are doing their best to ensure GOP victories this fall.

-marc

Posted by marcos on Jul. 13, 2010 @ 7:26 am

Tim

What a stupid idea Expecting a person to drag a family from their roots, school, connections, church or synagog to go to already over taxed areas. Stop feeding the rich Obama or at least stop sucking up to them .

Posted by GuestDavid on Jul. 13, 2010 @ 7:43 am

Tax the B-Jesus out of the rich

Lots of ways to do this. Pleasure as always reading Marc's post. Couple of post by others, not so much.

Posted by Guest LD on Jul. 13, 2010 @ 3:45 pm

Tax which rich?

Guest LD,

Nice cliche but there aren't nearly enough rich with nearly enough money to make any difference.

And that assumes that they will just sit there and be taxed. And of course they will not. They will move their assets and themselves to whichever jurisdiction doesn't apply punitive taxation.

Lots of ways? Ok. What are the others?

Oh, and if "Marc" were an effective political entity he wouldn't be an internet warrior with no real-life power or influence.

Posted by Folly on Jul. 14, 2010 @ 9:56 am

I see your folly Folly

Ha, I do agree with you there, Folly. The rich can be slippery bastards. But I also think they'd be less willing to uproot to avoid "punitive" taxation than us regular "folks" who must lower our standards and become migrant workers. I'll own up to the cliche if you own up to the double standard.

Financial transactions could be taxed. Commercial property could be taxed. Progressive taxes. Closing loopholes at the local and state level.

But, and here's where I might agree with you again, cutting spending might be the ticket: cut military spending. Make meat-axe cuts to it. Take it down to a stump.

Posted by Guest LD on Jul. 16, 2010 @ 2:27 pm