The current, as we speak, hubbub in Washington is about Tax cuts, you know those Bush era Tax cuts that were deemed good for all of us, rich and poor. The cuts that some opposed because they were seen to disproportionately benefit the rich. The cuts that would prove the wisdom of the Laffer economic curve. This curve promised that if you lower tax rates there would be a corresponding increase in tax revenue. This curve is what some called voodoo economics, no spiritual disrespect intended.
The old political gamesmanship is back in the context of the most destructive economic downturn in American history after the Great Depression. C.S. Lewis in his book, Mere Christianity, insisted that the best way forward was to first go back. The wisdom of this is beyond it’s theological context, it is daily life. Let’s test out the hypothesis, did the Bush era tax cuts work as advertised? For that answer we must go back through the last ten years of insanely higher spending and lower taxes.
Most of us can remember the wisdom on the streets in the beginning of George Bush’s presidency was to buy, buy and buy houses. Owning a house or houses was like gold in the bank, a sure quick return on the investment dollar as real estate values skyrocketed. Bernie Madoff was the resident investment guru of Wall Street. George Bush lowered the prime interest rate to further stimulate home investment while beginning in 2001 he gave minimal tax breaks to most Americans. The higher incomes would reap a bigger return on a percentage drop in the tax structure. The 2003 cuts in dividends and capital gains greatly exacerbated the Bush bubble.
As we all know, the Bush economic bubble popped. Our government in Washington chose to bail out the investment community comprised of predominately higher income taxpayers, at the expense of the rest of we powerless average American taxpayers. Based on the tax paying performance of our politicians, one could question to the extent that the higher incomes now pay there fair share. The politically powerful already have an unfair advantage. Our humongous tax code is bulging with tax breaks for the wealthy. In this new American culture it is O.K. for the rich to be a tax cheats. Those of us with automatic deductions from our paychecks are left to finance the country.
We average taxpaying loyal Americans have suffered disproportionately. Those wealthy folk who instigated the false economy in the first place in order to chase after the almighty dollar have been bailed out and gotten off scot free. Now they have hunkered down with their ill gotten gain to weather the economic downturn. The truth is that investing for job growth will not happen regardless of the tax structure. The truth is that the Republican party is heavily invested in the investor folk and it is payback time, even if we middle class Americans get in the way.
The Republican squealing is at least disingenuous, even deceitful. If the concern of the party was jobs, an investment tax credit for jobs would be a reasonable alternative. This is not proposed because the investment class knows that there is no fertile soil for jobs in this country, no jobs no tax credits for the bottom line. We are in for a long term essentially jobless recovery. The truth of the Laffer curve is that the downside of that curve is very unpleasant. The upside works to the good for a short period of time and in certain historical contexts but it is not an automatic cure for our economic ills. In fact, the curve is now irrelevant.
Going back as recommended is indeed unpleasant. To revisit the error of our ways requires courage that does not reside in Washington. Courage has been and will be the great strength of we average Americans who foot the bills for the dollar players. We must rebel and not buy into the political gamesmanship in Washington. The truth is that we Americans are in a fix and we must muster the courage to find a way forward despite the shared responsibilities of our mistakes.
Drastic times require drastic measures. Are we ready America?
G.Goslaw
Victorville, CA
