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Friday, May 11, 2012

Mitt Romney's Fiscal Insanity

Republicans are the party of fiscal responsibility, yeah right!  Saint Ronnie blazed the trail with his 'trickle down' economics.  When Reagan became President the U.S. had accumulated $930 billion in deficits in 204 years.  It took Reagan 8 years to almost triple that to over $2.6 trillion, an increase of 189%.  David Stockman, Reagan's first budget director has seen the light and now admits the 'trickle down' concept of tax cuts was a fraud and they knew it at the time.  Their real objective was to 'starve the beast' by running up deficits to justify spending cuts, except for one problem, they didn't cut spending either.

George H. Bush fared marginally better but still managed an increase of 55% in his four years.  Given another term, he would have more than doubled the debt.  In the 12 years of Reagan/Bush I they grew Federal debt by 10% or more in each of 12 years.

Bill Clinton changed that. He raised taxes for the wealthy in 1993 which led to a parade of Republicans, led by Newt Gingrich going in front of the cameras and predicting the end of America as we know it.  The result was budget surpluses for most of his second term.  The economy grew for 116 months, a record, he created more than 22 million jobs, almost all in the private sector and left office with 4% unemployment, the lowest in 30 years.  Then along came Bush.  The CBO (Congressional Budget Office) predicted that with Clinton's tax and spending policies in place the U.S. could retire it's entire federal debt in 12 years.  Instead Bush added $5 trillion to the deficit while Rove and Cheney constantly reminded us that "deficits don't matter" neglecting to add 'only under a Republican administration"

With the economy in free fall Obama took office with an unenviable task.  A new book has revealed that on the night of his inauguration a secret meeting of GOP leaders met to lay out their plans for the future.  The previous month had seen 750,000 people lose their jobs, a number that was repeated in January.  GDP had fallen 8.9% but the GOP had a bigger concern than the economy and the American people.  Their mission was going to be to stop to stop Obama dead in his tracks. That alone should disqualify them as a legitimate political party but in these times of acrimonious partisanship, anything is fair game for the right.

With a filibuster proof majority in the Senate, Obama was able to pass a watered down stimulus, a watered down financial reform bill and Obamacare, ironically based on the GOP's response to Clinton's failed health care reform in 1994.   Although formulated by the right wing think tank, the Heritage Foundation, Obamacare came under immediate assault as the right wing hysteria about 'death panels' and 'socialism' fueled the Tea Party surge in 2010 and Obama's policies were stymied,  The ultimate irony is that they were attacking a policy that was their own just 14 years prior.

Despite the empirical economic evidence since 1980 that tax cuts, wars, financial deregulation starting with the S&L crisis in the '80's and the far more devastating economic collapse in 2008, and exploding deficits, the GOP continues to push these same economic ideologies as if none of the above ever happened

Mitt Romney, their current flag bearer wants more of the same but with the even further drift to the right has adopted the same failed policies but on steroids.  The Bush tax cuts will be extended ad infinitum while a slew of new cuts expected to add $480 - $610 billion to the deficit each year are proposed.  Romney also plans to boost the defense budget to 4% of GDP from its current 3.5% which will add another $200 billion to the deficit each year.  Neither Romney nor Paul Ryan with his House budget have been able to elucidate any coherent plan to pay for these revenue losses other than to vaguely mention eliminating tax loopholes every once in a while.  Romney's only specific contribution thus far has been to suggest ending the mortgage interest deduction on second homes for those lucky enough to still have a second home, never mind a first home.  That's expected to add $1.5 billion a year in revenue which is a rounding number mess that passes for accounting in the Pentagon.

The GOP still obstinately cling to the idea that tax cuts more than pay for themselves.  Clinton proved that you can raise taxes, grow the economy and create surpluses.  Bush W. proved that tax cuts will add to the deficit and won't necessarily create jobs yet in the GOP world where the laws of math have been rendered obsolete, ideology trumps both sanity and empirical evidence.

The IRS recently released an analysis of the distribution of income growth in 2010, the first year of the current recovery.  93% of added income went to the top 1%.  9% went to the next 9% while the bottom 90% saw its income increase 0.2%.  So much for Obama creating a Socialist state. No economy can thrive under those conditions and the Romney plan, coupled with the recently passed Ryan budget (not that it will pass) will only serve to exacerbate those out of whack numbers.  Ultimately, what drives the economy is demand and no matter how much extra money is put in the hands of the wealthy, it won't be invested in creating jobs as the GOP believes. When 90% of consumers are not seeing their income grow, nor are they seeing any prospects growth a truly robust economy, not one eking out gains on the margins cannot exist.  

It's one big con and too many are suckered into believing it because of the effective right wing propaganda machine led by Fox News and the total domination of right wing radio that has convinced a large sector of Americans that Obama is a socialist who hates America, hates freedom and therefore has to be voted out of office.  This machine preys on the naive, convincing social conservatives who have always been inclined towards the GOP that they are serving their economic interests by cloaking their true policies in patriotic symbolism.

The reverse is true.  A Romney presidency, coupled with the GOP holding on to the House and taking the Senate will usher in the same failed policies of the Reagan and Bush eras.  In addition they want to repeal the minimal financial regulations passed in the wake of the 2008 policies, repeal Obamacare and deregulate industry as much as possible while still allowing corporations thousands of loopholes to avoid paying taxes.   The current fragile state of the economy is far less robust than when Reagan or the Bushes exploded the deficit.  Their policies on steroids, which is the current GOP agenda will if allowed to reign, destroy the economy to a level from which it may never recover.  The stakes are that high as conservatism in America moves further and further way from reality from history and from the basic rules of math.

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