The Price of Extremism

by Errington C. Thompson, MD

I’m extremely frustrated at the progress, or lack of progress, that we
are seeing from Washington. President Obama and the Democrats have
agreed to not billions but trillions of dollars in cuts to government
spending. Yet Republicans aren’t satisfied; they are holding the
American economy hostage.

Republicans are busy pointing to our
economic doldrums and asserting that the problem is that we are spending
too much money, insisting that the government needs to cut back.
Unfortunately for their argument, the data does not support the premise;
instead, what the data clearly shows is that over the past ten years,
revenues have decreased wildly relative to spending. In 2001, the last
year we actually had a budget surplus, revenues equaled 19.5 percent of
GDP; this year, revenues are only 14.8 percent of GDP. As any high
school student should know, you can balance a budget in only three ways –
increase revenue, decrease expenses, or both.

Let me digress for just a second. I know we’ve been over this before, but the talking heads seem determined to muddle the facts about exactly how we got into this economic mess.

First of all, the recession has caused a decrease in revenues and therefore an increase in debt. Secondly, we cannot ignore the Bush tax cuts and the wars in Afghanistan and Iraq as central reasons for the debt. The combination of these tax cuts and wars equals over $500 billion in additional debt this year alone. Over the next ten years, they are projected to add more than $7 trillion of debt.

Nor can we overlook the prescription drug plan that the Bush administration enacted in 2004. Promoted as a $250-billion-dollar program that would be fully paid for, in fact it was an unpaid-for giveaway to the pharmaceutical companies that cost more than $400 billion.

Adding together the wars in Afghanistan and Iraq with the Bush tax cuts and prescription drug plan, we must ask, “What was Congress thinking about?” None of this was paid for; in fact, more than 80 percent of our total debt can be traced to the Bush years. And now, suddenly, the Republicans want fiscal discipline. Give me a break.

Americans have shown time and time again they would like some reasonable fiscal discipline. Two recent polls (one by ABC news/Washington Post and the other by the Pew charitable trusts) reveal that an overwhelming majority of Americans support raising taxes in order to reduce the deficit. More than two thirds of Americans believe that raising taxes on those who make over $250,000 a year is okay. The support grows even more (close to 80 percent) if you ask whether we should raise taxes on those Americans making over $1 million per year.

In spite of these overwhelming majorities, Republicans are clinging to their no-new-taxes pledge. Their leaders walked out of negotiations when Democrats asked for four fixes: taxing hedge fund managers at the current tax rate instead of the 15-percent tax rate of capital gains, closing the corporate jet tax loophole, repealing the oil and gas subsidies, and limiting the itemized deductions for the wealthy. These proposals were too radical for the Republicans.

Republicans seem to be ready to burn down our economy in order to stand up for the oil and gas industry and the corporate jet lobby. They are, in fact, determined to cut the size of government at any cost; they seem to be willing to knock the nation into chaos in order to fulfill Senate Minority Leader Mitch McConnell’s assertion that his only priority this session is “to make Obama a one-term president.”

Since World War II, U.S. Treasury bonds, backed by the guarantee of the U.S. government, have been literally as good as gold. China, Japan, Europe, and other countries around the world have bought our Treasury bonds because they are seen as completely, 100-percent safe.

If we do not raise the debt ceiling, we are in deep badness. Countries around the world will begin to think of our bonds as something less than safe. It will cost more for our government to borrow money, and that means it will cost more for us to borrow money. It will cost more for us to buy a car or indulge with a new suit, or charge gas on our credit cards or invest in a house. Everything will become more expensive, and our fragile economy will once again slip into recession. Hundreds of thousands will be laid off as businesses contract because no one will be buying.

As my mom used to say, you don’t want to cut off your nose to spite your face. What Republicans are doing is cutting off our noses and spiting our faces, while they walk away scot-free—except for their financial bondage to Wall Street and corporate titans that are willing to destroy America for their own greed.