Yes, the United States has a public debt problem. No, it was not caused by runaway spending, or by stimulus, or by bailouts. It was caused by the recession, which led tax revenues to plummet (a lot)and automatic spending like unemployment benefits to increase (a bit). The secondary cause was the poor starting point, from three major unfunded deficit expansions in the Bush years – war, Medicare part D, and upper-income tax cuts. All across the world, stimulus and bailout accounts for no more than 10 percent of the rise in debt, and the US is no different.
Republicans like to claim that the deficit is their number one priority. But it isn’t. If we move from rhetoric to action, their main priority is upward redistribution of income. After three decades of rising inequality and real wage stagnation, the answer is…to keep on going, even to speed it up. Back up a little bit. Remember last year’s budget deal. What did Republicans insist on? Two things – the extension of tax cuts for high earners, and a massive estate tax cut. When offered a compromise on thresholds, they would not budge. It was all or nothing, the super-rich or nobody.
That was then. Flash forward to today when the Republicans now control the House.
The issue is once again the budget. But the past is not irrelevant. We could easily halve the deficit over the next decade by doing nothing – letting the Bush tax cuts expire. In other words, restore tax rates to the level of the prosperous Clinton years, already a postwar low. But no, this is off the table. In fact, under the Ryan proposals that are galvanizing Republicans, the Bush tax cuts would stay, and the top rate would actually be cut further – by a whopping 10 percentage points to 25 percent. This is simply stunning for a party that emphasizes austerity.
These austerity measures, directed at the very poor while at the same time increasing the wealth of the very rich, are deeply immoral. They are profoundly anti-life. They are anti-Christian.
Oh, and one of Ryan’s “budget” proposals is the repeal of the Dodd-Frank (weak) financial regulation bill. Just in case you needed any more evidence that protecting the super-rich was the ultimate goal here.