Who's Right in the U.S. Debt Limit Debate

The Republican, conservative columnist for the New York Times, David Brooks, recently wrote that the Republican Party has been infected by the Tea Party’s influence: a movement that represents more of a psychological protest than practical governing alternative, a movement whose members do not accept the logic of compromise or the legitimacy of scholars and intellectuals. Brooks says that their movement members who advocate government default have no moral decency; ignoring our nation’s pledge to pay back money to the people whom we have borrowed from. He also says the movement’s members have no economic theory worthy of its name. Previously these folks argued to let all large financial lenders go “Lehman Brothers” bankrupt, a maneuver which would have plunged the world into economic chaos and likely would have led to another depression, given that the Lehman Brothers collapse alone helped lead to The Great Recession, which required an $800 billion government stimulus package just to get us to the economically stable place we are at today.
Both President Obama, a Democrat, and House Majority Leader, John Boehner, a Republican, want to compromise on a debt deal that involves a 2/3 cut in spending and a 1/3 increase in taxes. What powerful interests does President Obama want to tax? He wants to eliminate billions of dollars of subsidy for corn based ethanol fuel; such generous tax breaks to companies earning money abroad that General Electric pays zero taxes and other multinational companies voluntarily pay more than zero just so that we don’t do something about this unfairness. Oil and gas company tax breaks, which reduce their taxes at a time when they are perhaps the most affluent profiteers in the whole world economy, rich people who earn between $250,000 to a million dollars a year who only contribute to and receive the same amount of money from social security as the average working American, and whose mansions and personal jets and charitable contributions lower their taxes by more than most people make in a year. Wall Street style hedge fund managers and billionaire investors who pay a lower tax rate than hard working Americans are also among the people and interests the Republican Party are trying to “protect’ in the current national debt debate. This is not about liberty, as the Tea Party says, this is about equality, economics and common sense. Hence, only 20% of Americans believe that we should balance the budget by cutting spending alone. This movement does not represent the silent majority, it represents a small yet vocal minority. 63% of Americans believe a debt deal should involve both cutting, spending, and increasing taxes, according to a recent Quinnipiac poll. According to other polls, 80% of Americans feel raising some taxes is necessary and even more than 50% of Republicans feel the same.
Very few knowledgeable people believe that the Republican’s protection of the corporate interests and the rich is based on economic theory. The overwhelming majority of economists concede the point that the Republicans hold this position for strictly crass, political and somewhat ideological reasons. After all, if the economic argument contained inherit validity, the economy of the Bush Administration would have been booming when we instituted and practiced our current model of allowing rich individuals and corporations to amass large concentrations of capital wealth for themselves, instead of redistributing it to people who would spend it to create demand for products and services. In contrast, the strongest sustainable economic growth we’ve had in recent years was during the Presidency of Bill Clinton, who raised taxes on the rich, raised the minimum wage and balanced the federal budget, bringing down the national debt to zero and then creating a budget surplus for the first time in ages.
Similarly, few economists see the Democratic Party’s defense of social security, Medicare and Medicaid recipients as economically sound. The truth is that because elderly voters turn out in such large numbers and are so well organized they have been able to garner too much of the nation’s wealth in the form of unlimited access to healthcare, prescription drugs, and government checks for social security, all funded by working taxpayers. When the number of retirees traumatically increases, with the retirement of the baby boomers, this elderly advantage will deprive the government from investing in programs the young and our country needs to compete against workers in other countries; investments in education, job training, pre-school, infrastructure, and the renewable energy research and development we desperately need to drive our economic engine.
Corporate interest groups, like drug companies, hospitals, insurance companies, medical insurance companies, doctors and personal injury lawyers have all used the health care systems and taxpayers ------- to overly enrich themselves at taxpayer expense. No one has fought back on the part of the taxpayer yet and this is our chance. President Obama is leading the way. The question is, will John Boehner and the Republicans follow or will they live in mortal fear of the Tea Party’s anti-government, anti-reasonableness, anti-intellectual threats and cave in to political concerns instead of finding practical, negotiated solutions? We’ll soon find out.