What Happens If Republicans Keep Cutting Taxes?

Question

Ever hear of "Starving the beast"? It's an American conservative political strategy which uses budget deficits to attempt to force future reductions in government expenditure, especially spending on socially progressive programs. The term "beast" is used to denote government and the social programs it funds, including publicly-funded health care, welfare, educational financial aid, and Social Security. Some empirical evidence shows that the strategy may actually be counterproductive, with higher taxes actually corresponding to lower spending: "Controlling for the unemployment rate, federal spending [from 1981 to 2000] increased by about one-half percent of GDP for each one percentage point decline in the relative level of federal tax revenues." The article (written by William Niskanen and Peter Van Doren of the Cato Institute) shows that "a tax increase may be the most effective policy to reduce the relative level of federal spending."

Sources include:
http://www.wikipedia.org
http://www.nader.org
http://www.catoinstitute.org
http://www.ctj.org

The Administration has reduced its economic growth projections but is still arguing that its tax policy is stimulating the economy. President Bush is now touting projections that the federal budget deficit for fiscal year 2007 will be only $205 billion as proof. The projections came Wednesday in the Mid-Session Review from the Office of Management and Budget. The Center on Budget and Policy Priorities rightly points out that revenues have increased, reducing the deficit from its high of $413 billion in 2004, but that always happens in an economic recovery, and usually revenues increase by more (by around 12 percent, as opposed to the 3 percent increase that we've seen since the beginning of this economic cycle in 2001). What's more, revenue increased by 16 percent in a similar period in the economic cycle during the 1990s after taxes were increased. Finally, the Administration actually reduced its growth forecast for this year from what it projected back in February.

The only thing we would add is that the real deficit is bigger than $205 billion. The Mid-Session Review clearly indicates (on page 32) that the Administration will borrow $180 billion from the Social Security Trust Fund this year to keep the total deficit as low as $205. Social Security is projected to collect $180 billion more in payroll taxes than it will pay out in benefits this year. Social Security was changed back in the 1980s to collect a surplus that would make it easier to pay benefits later on, when the baby boomers retire in large numbers and more Social Security benefits must be paid out. The Social Security Trust Fund is essentially the accounting mechanism that keeps track of this, and it was never intended to be used to make budget deficits appear smaller than they really are. Not counting the Social Security surplus, this year's budget deficit is really $385 billion.

Answer 1

Anyone with an ounce of sense knows that cutting taxes coupled with increased government spending and inflation only leads to ever-increasing deficits. The "tax cuts" are meant to increase individual spending in support of our economy. Unfortunately, the tax cuts are of benefit only to the very rich - the average American worker can spend their tax cut benefit on one family meal at a fast food restaurant.

It's a credit card economy that has been spoon-fed to the American people. Unchecked, your kids and grand-kids will suffocate when it all collapses.

Republicans have tagged a tax increase as an evil wrought by the Devil. Almost every item and service in our economy has steadily increased in price over the years. A large part of our "freedom" is paid for by our taxes. Until we accept the fact that tax increases must reflect inflation and the increasing price of consumer goods, we're in deep trouble.

Answer 2

This is the most boneheaded idea I have ever read. Tax rates have nothing to do with government spending. All spending measures have to start in Congress. The problem with deficits is that Congress spends more than the government taxes in, in taxes...no matter how much is taken in.

When Ronald Reagan cut tax rates, total tax revenues increased dramatically. Although Democrats in Congress agreed to cut spending, they did not do it.

When George W. Bush cut tax rates, the total dollar amount of taxes increased dramatically. Again, Congress is outspending the revenues. Even with record high spending, the deficit is expected to be less than the projected 171 billion.

When citizens have more money to spend, they spend it. This is why the economy has been booming non-stop for the past several years.

Answer 3

Confiscate all wealth above $10 million. Greatly increase penalties for government corruption and incompetence.

Make only the top 10% of wage earner pay income taxes.

Punish corporate irresponsibility harshly. Nationalize the oil companies. Get America off the oil addiction.


THINK LONG TERM!

Answer 4

WOW what the hell was all that?
what ever happened to keep it simple.

In easy terms
my wife=balanced budget
me=congressional spending
get a good balanced budget take my access to spending away and the numbers will come together!

Answer 5

The glutton (and downfall) of many politicians is having too much tax money at their disposal and not having enough ways to spend it.

So, they find ways to spend it, many of which are absolutely ridiculous. PORK SPENDING.

So other necessities that need to be addressed, aren't.

Then there's the great problem Minnesota faces (and other states.) They end up with a huge surplus and blow it.

We had 2 Billion dollars in surplus and they couldn't fix a damn bridge.

Interesting concept huh?

Answer 6

Im a Republican and I think we should decrease taxes for the really poor people and raise taxes for the really rich people. But no matter what we need to increase taxes to pay for our military and public services like schools and everything. And im sorry but i dont feel like reading everything you wrote in your question.

Answer 7

Your "question" is typical liberal new-speak. What you are advocating is socialism/communism, taking from those who earn and giving it to those who do not. Rather than depending on the "government" to take care of you, accept some personal responsibility for your actions or inactions. So many liberals conveniently neglect to mention " publicly funded" means paid for through taxes, money taken from those who worked for it.

Answer 8

For those of you who think Reagan's policies actually did what you are describing, I recommend:

"President Reagan, role of a lifetime" by Lou Cannon.

http://books.google.com/books?id=I5Yoz3dWP28C&dq=&prev=http://www.google.com/search%3Fhl%3Den%26q%3D%2522Lou%2BCannon%2522&sa=X&oi=print&ct=result&cd=1

Cannon has written five books on Reagan, and is considered the foremost biographer of Reagan.

Answer 9

Working people, that includes the democrats, get to keep more of thier money. Duhhhhh

Answer 10

the economy keeps growing