In Reject the Deal, Jeffrey Sachs argues we are on the verge of locking in Bush era maximum tax revenues of 18% of our gross domestic product, GDP, while our current government expenditures are 23%. Sachs suggests Democrats are about to commit the blunder of a century requiring savage cuts to our current government spending equal to 5% of current GDP, which will be cuts of approximately 22% of current government spending -- accomplishing the goals of the extreme right-wing of the Republicans Party of unraveling the New Deal and Great Society programs which had been beyond the reach of even Presidents Reagan and George Bush.
I need more time to research all the different points of view, but I can't see anything wrong with Sachs analysis. And, all I an find from Vice President Joe Biden's rationale is his assertion to Democratic Senators that this bill is better than going over the cliff. It appears this proposition needs substantially better analysis. I welcome different points of view here. Those favoring the bill should explain how we are going to get an additional 3% of revenues, and perhaps a 2% of GDP reduction of defense spending (about 44% of current defense spending), in order to preserve social spending.
President Obama just unilaterally gave away the last chance in the forseeable future for Democrats to raise sufficient revenues to sustain Democratic social spending, perhaps for decades. Meaning we will now have no choice, ands no bargaining power to avoid giving in to truly massive and unprecidented cuts to social programs well beyond anything anyone has imaged, as in the largest unraveling of the New Deal and Great Society programs in history. ... The public has not been told that yesterday's agreement threatens the financing of crucial programs for education, job training, infrastructure, environment, energy, science and technology, health care, nutrition, and the poor for years to come.
Here are the simple facts. Government spending today is around 23 percent of Gross Domestic Product, including 13 percent for mandatory transfer programs (Social Security, Medicare, food stamps, veterans benefits, military retirement, and others), 2 percent for interest, 4.5 percent for the military, and 3.5 for civilian programs. Taxes are around 16 percent of GDP, but would probably produce around 17-18 percent of GDP in a more robust economy.
Allowing the Bush tax cuts to expire today would have raised tax collections by around 2.5 percent of GDP, to around 21 percent of GDP by the end of the decade, thereby allowing the government to pay its bills assuming that the useless wars are ended and the bloated Pentagon budget is brought under control. The Obama-Senate plan will instead keep taxes at around 18 percent of GDP. The CBO will soon "score" the new tax plan; Democrats will be shocked at what the White House and Senate have given away.
The devastation predicted by Sachs seems vastly worse than "going off the cliff" and returning to the taxation level of the President Bill Clinton, the most successful progressive proven success model of our history. The CBO scoring of going off the cliff predicted two quarters of mild recession before roaring into 5% GDP growth by 2016, compared to the unimaginable levels of human suffering we are about to inflict on the next 10 to 50 years of Americans by unprecedented cuts to social programs. The sequester cuts were chump change compared for what we are in store for if this bill passes the house.
Whatever the precise numbers, the White House unilaterally and permanently gave away more than 2 percent of GDP in net revenues, all in the name of symbolically "taxing the rich" and "protecting the middle class." ... Obama is now a lame duck even before being sworn in for his second term, and he will have brought the Democrats down with him.
I encourage, in fact, implore all of you to read the entire original as it may be one of the most important single posts you've read in this decade, or substantially longer. At the very least, it should raise our discussions evaluating the pros and cons of this deal to a significantly higher and more consequential level where we evaluate consequences in terms of the total amount of government spending on social programs for all Americans as percentanges of GDP over the next 10 to 50 years, instead of looking at a few one year extensions of benefits for a few million.
But, as I see it now, it appears as we we have a once in a life-time choice between the successful, progressive, and proven President Clinton era tax revenue model and the catastrophic and regressive President Bush era model. Why are Democrats pushing for the Bush model? If we do so what is our plan for other revenues to sustain social spending?
This seems tragic, sad, and bewildering to me. What am I missing? Can someone talk me down? ... or up? It's hard to know which direction is even the right one at this point.
11:29 AM PT: If anyone needs additional clues as to the big picture of what is going on here please check out Laurence Lewis' Norquist: 'This is progress, making 84 percent of the Bush tax cuts permanent'
Yes, this is 84% of President Bush plan instead of President Clinton's plans -- "Its a cookbook folks!" A cookbook for destroying the New Deal and Great Society programs. Where are you going to get the revenue to sustain them. Can someone explain to me how we are not about to permenently lock-in the "starve the beast" plan originally articulated by President Reagan and his Karl Rove equivelent, Lee Atewater, but which neither Reagan, nor Bush had the power to accomplish?