I’m somewhat confused in our current debt ceiling drama. Republicans ask how Obama and the Democrats could be so out of touch with America and its economic frailty to propose tax increases. They are dug in around the rallying cry: “not one new dollar more in tax revenue!”
Yet in the same speeches Republicans also say what is necessary is to cut public spending vigorously to reenergize the economy. Don’t they know that if you are worried about a fragile economy, then any move that reduces private consumption places more pressure on a recovery? Raising tax or reducing spending provides the same result. If one is bad, so is the other; their policy effect is near identical.
Why don’t Democrats point this out? And while they are at it, Democrats should also dispel this notion that we’ve been overtaxed of late. In 2010, federal tax receipts were 14.9% of GDP, 3.1 points below the forty year average (1971 – 2010) of 18%; while federal spending was 23.8%, 2.8 points above 21%, for the same forty year period. Tax collections as a percent of GDP were 17% below the forty-year benchmark; spending 13% above; so about the same deviation.
So the problem isn’t one sided; we spent too much but we also collected too little.
With these facts in hand, a sane citizen would conclude the proper fix is to balance both spending cuts and increased tax collections together; and to do it quickly, since the August 2 deadline is fast approaching.
This is not the Republican conclusion. Since they aren’t stupid, I therefore conclude they are dangerously using the debt ceiling as a disingenuous and partisan pry bar in their pursuit to unseat Obama in 2012; shameful.