The Bush Tax Cuts Were Unjustified!

Published on June 15, 2006 By COL Gene In Politics

I am criticized for suggesting that we return to the tax rates that were in effect just prior to 2001. If you look back at the justification Bush used for the first tax cut that Congress approved it was to REPAY the OVERTAXED American Taxpayers because we had a projected SURPLUS of $5.7 Trillion over the ten years from 2001 to 2011. Both O'Neil and Greenspan counseled that we should NOT return to Annual Budget Deficits and that the tax cuts should be tied to the available SURPLUS to pay for them.

When the details of the first tax cuts became clear, there was a lot of criticism about how much of the cuts went to the wealthiest 5%. The explanation was that since the wealthy paid so much of the income taxes it was only right that they should receive a large portion of the SURPLUS. Both the argument that IF we had a Surplus we were over taxed and that a large portion should go to the wealthy sounded correct.

Problem is that early on it became clear there was NO SURPLUS to return! WHY then were the tax cuts not only continued but two more rounds of cuts were proposed by Bush and passed by the GOP in Congress? The answer was the economy was going south and we needed tax cuts 2 and 3 to STIMULATE the economy. The problem with that is that to get the most stimulation for the economy, tax cuts should go to the people that will spend them and create new economic activity. The Middle Income Tax Payer. Thus what should have taken place to stimulate the economy is discontinue the cuts to the wealthy and increase the cuts to the middle income Americans. What did Bush and the GOP do? The kept the huge cuts of the wealthy from the first cut and added two more cuts that gave even more to the wealthy! At the same time Bush was cutting the Federal Revenue with his tax cuts, he and Congress started an ever increasing spending increase that has resulted in the largest increase in the National Debt in our history!

Thus, Bush has created the current fiscal crises and his rational for the tax cuts to the wealthy, either to return the SURPLUS or to provide STIMULATION for the economy is invalid! Why then has Congress not corrected their earlier mistake? What Bush is asking is to make the tax cuts permanent even though even he knows there is NO MONEY to pay for those tax cuts? There is no SURPLUS to return to ANYONE!

Comments

Island Dog

on Jun 15, 2006

How many times can you write the same article over and over? What are you going to do with your life when Bush is out of office?

Draginol

on Jun 15, 2006

You are starting to sound like a real kook.

The government's money is our money. Tax rates *today* are too high. I have to pay 35% of my income to the fed and then 6% to the state and then I have property taxes and sales taxes. When I get done, I am effectively handing over half my money to the government.

This past year I averaged working around 60 hours per week. That means I worked for the government 30 hours per week. A lot of the "rich" you like to decry are rich because they work a lot more hours than the average person. High tax rates decrease the motivation to put in those hours.

If it weren't for those tax cuts, you would not have this site to rant on. It was those tax cuts that allowed us to have enough capital to hire the extra ASP developer who coded JoeUser.com. So if tax cuts are so unjustified, perhaps you should go somewhere else for your rants.

bakerstreet

on Jun 15, 2006

Our budget is out of balance because of rampant waste and malpheasance. While we do elect the Congress, we are no longer really represented by them in terms of the budget. If you asked any number of people, I would bet you they'd agree that a museum is not "defense" spending, and neither is a 2 million dollar park for San Francisco.

Yet those are the kind of things that get tagged onto the defense budget. If all the pork and waste and outright corruption was cut out, we'd have no problem balancing the budget with the tax money we collect. There's no possible way for us to do that, though, because we can only vote for candidates hand picked by the parties to serve the party interest once they win.

So, when your kids won't stop spending money, do you get a second job, or cut the credit cards? Do you think it wise to give people who have shown themselves willing to waste every dime you give them MORE money? Yes, you do. Why? Because you are a rabid, tax-and-spend Democrat posing as a moderate.

COL Gene

on Jun 15, 2006

Draginol

No, the tax rates are not too high since we have a deficit. They are TOO low and the spending is TOO high. You NEVER answer the question of since there was no Surplus which was the reason for the Bush tax cuts, why were they not ended? There is NOTHING to give back. Like Greenspan and O’Neil said the tax cuts should end if there was no SURPLUS to pay for them!!!! The Bushies NEVER answer this question!

COL Gene

on Jun 15, 2006

Bakerstreet

Our budget is out of balance because we increased spending and reduced income by tax cuts. It is the very same thing that Reagan did with the very same results. Bush 41 was correct-- VOODOO Economics!

Draginol

on Jun 15, 2006

Col Gene - you just repeat the same message over and over.

There are two ways to balance a budget - increase revenue or decrease spending.

Those who disagree with you want to see the government decrease spending.

COL Gene

on Jun 15, 2006

Draginol

That is because the basic question I pose is NEVER answered.

Why do we have a tax cut to return a SURPLUS that NEVER existed? What is your answer?

Draginol

on Jun 15, 2006

We did have a surplus. But one doesn't need a surplus to justify a tax increase. Your question is based on a false premise. To you, balanced budgets are the goal. For me, the government involvement in my life being kept to a minimum is the goal.

Republicans had long maintained that the tax rate was far too high. It is still too high.

If I were emperor, the tax rate would top out at around 25% for the very wealthy. Even now, with a budget deficit, I think taxes should be cut across the board and the government forced to cut spending.

I am probably wasting my time even trying to explain this to you. I'm not really trying to convince you, you are too set in your ways. But I see the federal government as just another thing I give money to in which I weigh what benefit I receive based on the money I pay in. The government is not providing me with enough service to justify the amount of money I'm contributing to it. THAT is how the federal government was originally intended btw.

stutefish

on Jun 16, 2006

In other news: Bush may be on track to halve the deficit three years ahead of the deadline given in his earlier campaign promises. One reason given for this: tax revenues.

Link: http://www.investors.com/editorial/IBDArticles.asp?artsec=5&issue=20060612

Nitro Cruiser

on Jun 16, 2006

Flat Tax....everyone pays the same, rich or poor, no limits....say somewhere between 10% and 15% (10 would probably be fine). All income is counted, no topping out, and no freebies because you have 20 kids. Everyone pays the same rate...can't get much more fair than that.

ABass

on Jun 17, 2006

It is impossible for a tax cut to be unjustified. Taxes are necessary to run the government, provide roads, defend the country, etc. but the problem is that our government is unwilling to limit its spending. I think a 10% flat tax is a good idea, but we also need controls in place that insure that our government spends less than 10% on a regular basis and is prevented from spending more except in emergencies. If the national debt was eliminated then we would be in a much better position to live within our means. Borrowing money, either at a national level or an individual level, creates a type of false inflation. Because people can buy things they can't afford, the demand is higher and when the demand is higher the price goes up.

COL Gene

on Jun 17, 2006

Stuefish

Even if Bush does cut the Annual deficit in half he will have added more the $4 Trillion to the debt and will leave office with an unbalanced budget. That will drive the annual interest from $230 Billion per year when he took office to about $500 Billion per year and it will continue to go higher because we will still be adding to the debt EVEN he if cuts the deficit in Half.

Cruiser

The issue is not a flat vs. progressive tax but to provide the same amount of tax revenue as we agree to spend. That is what Bush and the GOP has failed to do. A flat tax even at 15% would not generate the needed tax revenue to balance the budget and would give the wealthy another huge tax cut at the expense of the country. The tax rate on the average for Federal income tax has been about 25%. A flat tax does not address the ABILITY TO PAY the way the PROOGRESSIVE tax does.

Dragional

We had a $15 Billion surplus in 2000 not counting the Surplus in Social Security and Medicare. There was NOTHING close to the surplus Bush claimed or the amount Bush has cut taxes. The PROJECTED surplus of $5.7 Trillion was a BIG PILE OF DUNG!

Nitro Cruiser

on Jun 17, 2006

Sure Federal taxes need to be 25% because many lower income families get all or most of their tax money back in refunds, while highest paid shelter a large percentage of their income. I got a big refund back myself this year. Now I'm not suggesting that the government should not control spending, they should. But as a society, we should sit down and decide just what the government should provide to the citizens of this country. I feel it should provide for defense, health related issue like the FDA (but not national health insurance), major infrastructure and related safety programs, some education as it relates to national standards, and of course diplomatic missions. I realize this is broad in scope. A national referendum on what should be provided as far as services would be a good start, followed by a vote to accept the top programs. Cut the pork right off the government bone.

The problem is we as a nation expect too much from the Federal gov. Many things should be financed privately through donations or on a state level are being levied against all tax payers. I think even natural disasters should fall on the state, and charitable contributions. If somebody thinks it unfair, they should move or buy insurance. The Federal gov. is way to bloated. States would have to be cautious or they would find people moving away. It would force states to make living there more attractive too.

The reduction in paperwork, and staff needed by the IRS if a flat tax were implemented would be a step forward. Just my two cents.

Eric Larew

on Jun 17, 2006

Just look at the facts. Per the Budget Historical tables of Revenue and Spending budgets at http://www.whitehouse.gov/omb/budget/fy2007/pdf/hist.pdf

I listed the table below. Three things affected the revenue. One: A resession that started in 2000 through 2003. You can see the revenues went down from 2000 to 2001 before any tax cuts. Two: 911, had a major impact on revenue as well. Three: Tax cuts that went into effect help to turn around the resession. As you can see the revenues are higher in 2005 than the record revenue in 2000.

The whole reason for the deficit is SPENDING. Look at the spending from 2000 to 2005. It has increased every year. You can blame both congress and the president for this. Congress keeps spending and the president will not veto. Tax Cuts have nothing to do with the deficit...Spending is the problem.

Year Revenue Spending Surplus/Def
2000 2.03 Tril 1.79 Tril + 236 Mil
2001 1.99 Tril 1.86 Tril + 128 Mil
2002 1.85 Tril 2.01 Tril - 157 Mil
2003 1.78 Tril 2.16 Tril - 377 Mil
2004 1.88 Tril 2.29 Tril - 412 Mil
2005 2.15 Tril 2.47 Tril - 318 MIl

COL Gene

on Jun 18, 2006

First I agree that spending increases are a large part of the problem. However as we all know even without things like Katrina, 9/11 or the Iraq War, all of these things increased spending with no added funding; there is inflation that will push up cost even if we did not ADD new spending programs. Then we add PORK which is greater then ever since the GOP took over. The GOP criticized the Democrats for Pork and the rate at which spending overall increased. The GOP is FAR worse and then pays for that increased spending with more debt. In the past when we became involved in a war, there was an added tax to PAY FOR THE WAR. Not with Bush, he puts it on the TAB!!!

Now to your numbers-- Those numbers are using an accounting policy called the "Unified Budget Act”. That combines the Federal budget with Social Security and Medicare. Those two programs currently produce a NET SURPLUS just short of $200 Billion per year. Thus your numbers are AFTER subtracting that surplus. The REAL position of the federal budget in 2000 was not $236 Billion surplus but about a $15 Billion dollar surplus AFTER removing the Surplus from Social Security and Medicare. In 2005 the actual deficit was $620 Billion after ALL spending including all the supplemental spending for Iraq. Another trick Bush is using is they pass the budget WITHOUT ANY money for Iraq. Even though they have good estimates as to what that war will cost, Bush sends his budget to Congress and the Congress passes the budget with NOTHING for Iraq or Afghanistan. Then they come back as they did last week and pass a SPUPPLEMENTAL Appropriation to pay for the Wars and that ADDS to the Federal Spending.

WE need to cut spending, fund the added spending for the war, Katrina etc. We need to collect the several hundred billions per year that the Fed estimates is not collected and finally we will need to increase tax rates to balance the budget and then begin generating a REAL SURPLUS, without Social Security and Medicare to begin paying DOWN the National Debt. The deficit will continue to be a budget problem EVERY YEAR because of the increase in the INTEREST we MUST pay because the debt has increased under the Bush/GOP fiscal policy of funding the increased spending with more and more DEBT!!!!!!!!!!!!!

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