Economic disaster and the fiscal cliff

-A A +A

The recently passed bill to “solve” the Fiscal Cliff economic crisis should not have been passed. It is a bad bill and a worse law. But not because it is too liberal or too conservative.
The Fiscal Cliff bill passed jointly by Republicans and Democrats will now turn the United States into a perpetual borrowing nation.
This nation has real debt and deficit problems. We haveaccumulated a $16.4 trillion national debt from decades of spending beyond the taxes and fees the government receives.
And each year for the last five years, the nation has run a national deficit, or annual loss, of more than $1 trillion.
That amounts to the U.S. borrowing 40 cents for every federal dollar spent each year.
The above said, the problem is not due to one party overspending, or to the 2008 banking disaster and resulting Big Recession, or the government choosing to do jobs that it should not be doing.
The reason we have a national borrowing addiction is because of two primary factors: the President Bush tax cuts since 2001 have starved the U.S. Treasury of at least $700 billion a year in tax revenues from all sources, and the wars in Iraq and Afghanistan have been funded through borrowing, rather than cutting spending elsewhere or raising more taxes, or both.
Combined, these two factors have created the annual $1 trillion borrowing that Presidents Bush and Obama have had to do each year in order to pay for domestic, defense and social safety net programs like Medicare and Medicaid.
Now, with the Fiscal Cliff bill being passed, the Bush tax cuts that starved the treasury have been made permanent for every American who earns $400,000 or less per year.
Despite Obama’s 2008 promise to let the temporary Bush tax cuts expire, he has reversed course and made them permanent.
Permanent means exactly that. The artificially low tax rates that moved America from an annual budget surplus to an annual deficit were created by Bush and accepted by Democrats.
Instead of letting tax rates return to the Clinton era levels, which had a “high” rate of 39.6 percent for the super-rich, and thereby bring in at least $700 billion a year in revenues that we once had, President Obama has guaranteed America will always be “short a dollar” in funding any type of normal federal government.
What is worse is the Republican hypocrisy. Republicans correctly point out that America cannot continue running annual deficits of $1 trillion a year.
They also correctly point out that Medicare health insurance for seniors and the Obamacare health insurance for the poor and working poor are eating up a huge chunk of the American federal budget.
So Republicans piously push for dollar-for-dollar cuts in domestic spending for every dollar in new borrowing authority that any President seeks so the nation can pay its existing bills.
But they fail to admit that the annual federal deficit is largely a creature of the ruinous Bush tax cuts that should have been reversed years ago.
Now, they are permanent and will guarantee America continues as the world’s largest debtor nation.
So-called entitlement programs like Medicare, Medicaid and Social Security are not the “problem” that needs fixing.
What we need to do are: apply the Clinton era tax rates to every American; increase the tax rate for millionaires and billionaires to 45 percent; kill the 15 percent maximum tax rate for dividends and interest income and tax it the same as wages earned; end the Social Security payroll tax cap that fails to tax earnings above $113,000; increase corporate tax rates via an Alternative Minimum Tax of up to 39.6 percent for corporations; and allow Medicaid, Medicare and Obamacare to seek competitive bids for medical supplies, drugs and services.
Until we increase our national revenues, or control our costs, or both, the America we once revered will continue to be a fiscal disaster zone.

Tom King is a Los Alamos resident.