"Voodoo Economics" Needles United States

Author: Dave Rosenberg

Published: December 2, 2004

It is a cold day in hell when a Democrat is the one preaching fiscal responsibility and sanity. However, that is what we've come to. The president forced through a crushing, and ill-advised, tax cut plan when the economy was already starting to teeter back into recession. The plan to make the entire tax cut package permanent would dramatically raise the national debt and place our economy at risk. They must be rolled back.

The standard Democrat line at this point would be for me to assail Bush for a tax cut plan that concentrated an enormous percentage of the cuts on the wealthiest Americans. The Tax Policy Center confirms that the top 10 percent of Americans received 53 percent of the tax relief. Republicans point out that the rich pay the most taxes, and that's correct. However, since the Congressional Budget Office reports that the top 20 percent pay 63.5 percent of the total tax burden, it's reasonable to assume that the top 10 percent pay far less of a proportion than the 53 percent that the tax cuts gave to them. The poorest 60 percent of Americans only received 13.7 percent of the cuts.

The Republicans call this form of tax relief "trickle-down economics." They say that it's okay to concentrate the relief among the super wealthy because it will then "trickle down" to the lower classes. The only problem with this theory is that it just doesn't work. Even the president's father, former President George H.W. Bush, called the idea "voodoo economics" because its support comes from bizarre faith rather than reason.

Reason must be used on these important issues, and we must listen to experts. Before the election, a group of ten Nobel laureates in economics criticized the Bush tax plan because it was not the stimulus that he claimed it would be. Indeed, the tax cut plan has failed to resuscitate the economy at the rate that the president promised.

The truth is that massive tax cuts, like the kind advocated by the President, do nothing but build the national debt. The president entered the Oval Office with a $172 billion budget surplus. He pushed through the tax cuts, and we are now sitting at a $521 billion deficit. The reasons for this are many, but even the president's website has confirmed that tax cuts played a major role in the creation of the deficit. The deficit, even as a percentage of our large GDP, is one of the largest of the past thirty years-a time-span that saw President Reagan's own ill-advised tax cuts.

Conservatives rally around Reagan's cuts as proof that the philosophy can work. However, times have changed. We were able to get by with Reagan's cuts because there was an entire world willing to invest in the United States to offset the resulting deficit. These investors have already pumped in all that they will. It is appearing likely to many experts that the value of the dollar will have to fall to stimulate foreign investment. Of course, the dollar is falling now-and the Bush administration is doing nothing to stop it because they need it to fall. The tax cuts and debt are placing our economic strength at risk.

And, we're at risk from a foreign policy standpoint if more of our economy is financed from overseas. The International Monetary Fund has warned that the United States' financing is already at the level of a third-world country. We simply can not effectively maneuver on the world stage if we must answer to our foreign lenders.