If, when I get to paying the bills, I find myself short of money, I usually do two things.
First, I try to find ways to spend less. I look for lights that are left on, long showers, impulse purchases, unnecessary trips to town, dripping water faucets. I cancel subscriptions for publications I don’t get read. I make fewer long distance phone calls and perhaps put off fixing something that needs repair. I try to cut back spending.
The second thing I do is look for ways to increase our income. I take on new work projects, find a part-time job, sell things I don’t need, try to do a better job of marketing, advertise, find new customers.
Most of us, in the face of hard times and climbing debt would not go to our boss and ask for a pay cut. Neither would we go to our customers and cut our prices, reduce our services, or eliminate profitable products.
And yet, in the face of climbing national deficits and out-of-control debt, that is exactly what has been done with our national budget.
Ten years ago, a huge tax cut was enacted by then-President Bush and Congress. Income was pretty much in line with spending at the time, but we were still in debt. Instead of paying off what we owed, we started reducing our nation’s revenue. The tax giveaways were justified with arguments for what has been termed “trickle down economics.” The reasoning was that giving tax cuts, especially to the wealthy and to corporations, would result in a growing economy and prosperity for all.
Ten years is long enough to determine if this “trickle-down” experiment worked. In those ten years, unemployment has skyrocketed, the economy is stagnant or declining, the national debt is mushrooming, and the economic well being of the majority of Americans has declined. The tax cuts, costing an estimated $2.5 trillion since they were enacted, have not produced the vibrant, growing economy we were promised. The average income of the middle class in this country has declined in those same ten years.
Not only have the tax cuts not produced the new jobs and economic growth promised, these cuts in income were not accompanied with equal cuts in spending. Instead of cutting our expenses to pay for the tax cuts, our country launched two wars and sent troops around the world. This is like finding our household budget in the red, asking our boss for a cut in pay and then buying a new car. Such behavior would send most of us directly into bankruptcy court.
The economic policies of the past ten years have not put everyone in our country into a downward spiral. The very wealthiest Americans have done well. The top 1 percent of taxpayers have not only reaped most of the benefits of the tax cuts as a percentage of their income. They have also benefited from even our stagnant and recessive economy. The income and net worth of the richest among us have increased substantially and their tax bill has decreased to the lowest level in more than a century.
There are proposals to extend these ill-conceived tax cuts for the next decade and more. Finally, after ten years, is Congress looking for ways to counter the resulting loss in revenue and rising debts. Sadly, we are not considering cutting spending on wars and increasing our revenues by abandoning these tax cuts which benefit the country’s wealthiest citizens. We are instead cutting programs and services which benefit our country’s poorest and most vulnerable. Cuts to food programs, social services, Medicare, Medicaid and Social Security will not solve our problems. The $860 million cuts proposed for the Women Infants and Children food program is equivalent to extending tax cuts to the nation’s millionaires for one week. Social Security is self-funding and though the program will run out of money in about 40 years if nothing is changed, the program is not responsible for any of our country’s current debt. Cutting Medicare and Medicaid may help the debt in the short term, but will do nothing to curb the rising cost of health care. These cuts simply shift costs to the poor, the elderly and to the health care facilities that provide them care. The consequences for the health of those who depend on those programs will cost the economy in the long run.
Cutting out groceries, turning off the electricity and the heat, skipping the dentist and ignoring health problems may balance our household budget in the short term, but eventually such economics will be an individual’s demise. Trying to save your business by not buying inventory, cutting the services one provides and giving all your customers refund vouchers will not turn your floundering business around.
Giving tax cuts to those who have more than they need and more than they can spend will not stimulate our economy. Taking from the many to benefit the few will result in even more economic and social instability.
Ten years should be enough to understand that tax cuts don’t result in economic growth. Wealth does not trickle down.
Copyright © 2011 Janet Jacobson and Sustaining the Northern Plains