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Some in Congress believe in bloodletting, that austerity leads to economic growth

by rescuetruth on July 31st, 2011

For many years, Republicans have embraced a philosophy that says one must reduce the size of government at all costs (outside of defense, of course).  Over time, Republicans learned that it would be very difficult to kill social programs that many Americans have come to depend on.  Most importantly, Americans overwhelmingly support Social Security and Medicare, our prized social insurance programs, and fund them directly through payroll taxes.  On the Senate floor today, Sen. Tom Coburn said that the government “spent” the citizens’ Social Security money.  Might I suggest that Mr. Coburn and his friends go and find that money, as we did not intend for it to be spent on tax cuts for the wealthiest Americans, and two three wars in the Middle East.

In order to reduce the size of government, the public had to be convinced that it was in their best interest to kill the very programs they overwhelmingly support, and depend on.  It seemed like an impossible feat.  In other words, Social Security, Medicare, and any other programs deemed unworthy would become martyrs for the greater good of the United States.  After all, if these programs were cut, it would save the country from a fiscal doomsday and impending debt crisis…right?  Wrong, it would simply create a new set of issues for the inept 112th Congress to handle.

To get to this point, politicians have relentlessly taken the position that taxes will lead to greater prosperity for all, only to watch the overwhelming benefit go to a very slim minority of individuals at the very top of the highest income bracket.  These efforts have led to the lowest levels of taxation since the Truman administration, or around 1950.  Seriously, who doesn’t want lower taxes?  From a political perspective, it is extremely difficult to raise taxes, even if it is the right thing to do, and supported by proven economic theory.  In the end, Americans have been given a false choice—between ending the myriad wars, and reverting to Clinton-era tax rates, or at the very least, eliminating egregious tax loopholes and unfair subsidies, would eliminate about half of the projected deficit.

Austerity does not promote economic growth.  In fact, we have clear evidence that large spending cuts will only compound the drop in consumer spending, real estate, and the rise in unemployment.  As states have cut spending and decreased their payrolls, unemployment has risen, offsetting private sector growth and stunting recovery.  Since the 2010 midterms, President Obama has been buying into many of the same ideas that caused a massive spike in the debt and deficit in the first place.  It is a dangerous proposition, and it threatens the social contract on all levels.

A Hollywood producer might call this the greatest heist in American history.  A financier might call it Heaven.  A club owner might call it amateur hour.  At the very least, the 112th Congress is practicing bloodletting—a disproved, antiquated practice involving spending and tax cuts.  No matter what we call the ongoing travesty in the 112th Congress, it is misguided and immoral.  It is my hope that Americans will see right through the debt ceiling charade, and calls for austerity that will only compound the effects of the economic downturn.  Both President Obama and the 112th Congress must put an end to this distraction, and work together to address the rapidly increasing infrastructure and jobs deficits.

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From → Economics, Politics