If you think that we need a reduction in taxes from the Bush-Cheney 2001 and 2003 tax cuts, you need to get the facts. You are being sold a bill of goods, a scam, a lie about taxes so that a few rich men who will benefit greatly want you to think that you will benefit. You will not.
The cost of government has been based for over a century on certain key principles. The welfare of man. Education for everyone who works hard at it. Economic opportunity–jobs, in other words. Immigrant populations came from everywhere in the world to seek safety, security and economic opportunity, far from the oppression of kings, and oligarchs and dictators. Running from exactly the type of government we may be about to enter completely.
Their goal was to make a comfortable, safe home and make a living that would enable them to support a family. Over the generations, they organized to create good incomes and good working conditions. By the mid-1970s the middle class was doing pretty well. They had a forty-hour work week, about 32% of all workers were in unions and American manufacturing was a substantial part of the national infrastructure, even though certain industries had been hit hard by foreign competition, like the steel industry. Taxes were higher on the wealthy, but the pace of new industrial millionaires was actually accelerating.
But after the Vietnam war and the war in the Middle East which shut down oil to the U.S. for a time and increase gasoline and petroleum product prices beyond anything that could have been imagined, things changed somewhat. We had terrible inflation and high interest rates were not bringing it down. President Ford had tried everything including buttons, “WIN” buttons, “Whip Inflation Now” but nothing worked.
In 1980, we were in a period of inflation and interest rates so high that we were heading into a recession. No one could afford automobiles or houses or any other major purchases. Ronald Reagan was elected on the promise of rectifying the situation. He did. He cut the supply of money, which caused interest rates and inflation to slowly come down. During that time we had the worst economic downturn since the Great Depression of the 1930s.
But a price the American Public had to pay for this was the elevation to power of a handful of extremely conservative corporate leaders who demanded and received a reduction in the top income brackets and corporate income taxes. If you were paying 74% on every dollar over something like $500,000, which was a lot of money at the time, you now paid 28%. Astonishing. The result was that the government began to lose about 50% of its revenues overnight. The national debt more than tripled to nearly 3 trillion dollars by 1988. Perhaps more importantly, we now had a tax system in place that no one wanted to change that was bleeding about 500 billion dollars from the Treasury every year to pay for these tax cuts.
Everyone got tax cuts, and the top rates eventually did go back up to 35%. But the government was built to run on much higher revenues. So the deficits kept coming, and only when Clinton came to office, with a Republican Congress, did the government begin to balance the budget. Top rates were raised to 39% and government costs were dramatically reduced and growth was reduced by something called “paygo.”
Paygo meant that if a Congressman or Congresswoman wanted to enter a piece of legislation that would cost money, it needed to be offset by cuts somewhere in government spending. That, plus a very strong business environment here in the U.S., resulted in balanced budgets. Then came George W. Bush.
Bush the Lesser cut taxes twice and started two wars. The first was done with full justification but overkill against a handful of Muslim Arabs in Afghanistan. The second, a totally uncalled for, discretionary and probably illegal war, simply tried to remove Saddam Hussein and march American troops into Iraq to control the oil in that country. There were numerous excuses about why we went in, but ultimately they were all discovered to be lies. We immediately went back into national deficits in the hundreds of billions each year, while the rich just got richer.
With a clearly reckless leader, uneducated, disinterested in government, a lightweight intellectually and weak morally and ethically, Congress simply abandoned all the rules. Of course, we know that Dick Cheney, former Nixon aide, former aide to Gerald Ford, former Secretary of Defense under Bush the Smarter was ready to loot the government as fast as possible of as much as possible.
First of all, he had a meeting with all the oil companies within days of taking over the White House (and he did…he ran things…there is no question about that) and in that meeting, which was secret, we now know that he laid out his plans for Iraq. The leaders in that meeting, the principal one of which was the CEO of ENRON were basically asked what they wanted and Cheney would deliver. It was the greatest collusion between industry and government since the days of Warren Harding in the early 1920s, and perhaps since the days of J.P. Morgan at the turn of the 20th Century.
After the wars sucked huge amounts from the Treasury, the next blow was the Prescription Drug Bill. Instead of making drug companies charge the same amounts here that they were everywhere else in the world, the Neocons simply created a huge government program to give Seniors a slight break on drug prices, less than 25% for most of them, but allowed the pharmaceutical companies to raise prices at will, and actually prohibited Medicare from negotiating prices. By the time the bill was enacted, drug prices had already risen high enough to make the differential for seniors meaningless. It was another scam. That was when many people realized that this political party was in the hands of large corporations and the super-rich.
The problem was that so much money had been removed from the Treasury and given back to the top income earners, 100% reductions in taxes since 1981, that there was no money to run government and we had to start really borrowing in earnest from the rest of the world to pay for our wars and our tax rebates. Then in 2008, Bush and Cheney’s decision to put Chris Cox into the chairmanship of the SEC and his deliberate and criminal dismantling of that organization created the atmosphere that caused the Great Bush Crash and Recession of 2008, costing a minimum of 2 trillion more on top of the 6 trillion dollars in additional debt the Bush Adminsitration had added already. In addition, the market crash cost the country 15 million jobs lost and nearly collapsed the entire economy rather than merely reducing it by a staggering 20%. They created the greatest economic downturn since 1929.
So now, with a total tax bill of something like 29% of GDP, we are the least taxed society in the advanced world, about ten percent lower than Canada and about 20 percent lower than European countries. And the Neoconservatives want to lower our revenues even more while we carry a soon-to-be 14 trillion dollar national debt. And make no mistake about it. These evil, greedy Scrooges in the Fortune 200 want to earn these tax breaks on the backs of the poor and the elderly. They are already talking about cutting Social Security, raising Medicare fees and they have already challenged health car reform a dozen times in court, losing all but once.
Let’s go back and take a look at what has happened since Ronald Reagan took office in 1980. We had a crisis in the Social Security system because the cuts in taxes began to panic the Congress when they suddenly, after all these tax cuts, they realized that they might not have the money to bail out Social Security if it ever failed. They made some adjustments in the Social Security system and since 1984 until 2010, it has had a surplus, that is, more coming in than was paid out in benefits every single year. Paid for completely by taxpayer contributions on top of their income taxes.
And what about the future of Social Security? Well, everything is fine just as it is right now until something like 2037. After Reagan and Tip O’Neill fixed it in the 80s, it was just rolling along, creating surpluses every year. But the government under Bush began to borrow money from the Treasury for tax rebates. So with Social Security not walled off, as it should have been, money was theoretically drained from Social Security, and only IOUs for government bonds left in the place of the funds we paid in each month. .
This was, of course, like robbery or embezzlement. These funds belonged to American citizens as they retire. It is not a “Ponzi” scheme as wealthy Neocons call it. They want it destroyed because they are, let’s face it, greedy bastards. There is no other explanation.
Social Security is an investment plan and an insurance plan in which U.S. citizens pay money from their paychecks into a fund which becomes an annuity when they turn 65 (or 66 at this point.) It is also a disability insurance policy for those who have major disabling injuries or illnesses. You will never hear that, even though it is a simple fact and you don’t need to be a financier to figure it out, because the rich own the media, and people like Bill O’Reilly, Glenn Beck, Sean Hannity and Rush Limbaugh are paid tens of millions of dollars a year to lie about it and keep lying about it every single day.
So why should we cut taxes, when that will reduce government revenues at a time when the people who embezzled our retirement funds, the Neoconservative Republicans, now want to cut Social Security to help balance the budget? In other words, let’s borrow from the federal government to give tax cuts to the wealthy and then, when they have impoverished the Treasury, let’s borrow from Social Security so that we can eventually cut back on its benefits. Screw people and then screw them again.
If you are a “supply sider,” a Neocon Republican…that’s all there are these days…it makes quite good sense. You look out for number one. That’s it. That’s the whole philosophy. But if you are a Liberal, or even just a rational human being, you have paid money into a system. You should get the promised value from that system (as meager, frankly, as it is) because that is what a social contract does. One persons pays insurance premiums for a promised annuity and the annuity comes due at some point and the person collects.
The tax cut bill that passed the Senate is designed to upset that plan. It is designed to take money from Social Security and not replace it…about 700 billion dollars over the term of the tax cuts. It is a vile, sordid, miserly piece of legislation that should be voted down. The Neocons say that they will then hold up unemployment for millions of people. If they do, and people suffer, then those people should make the Neocons suffer to the point that they never, ever try such a vicious, immoral act again…at least those who survive.