Watch below as House Minority Leader, John Boehner of Ohio, advocates to keep the Bush tax cuts at a cost of roughly $3 trillion dollars added to the national debt, because he believes (correctly, in my opinion) that job creation is better for the long-term debt reduction than cutting economic stimulus during a recession.
(FYI, the Obama administration's proposal would keep the "Bush" tax cuts (2001, 2003) for taxpayers making less than $200,000 or $250,000 if they are a couple. This extension would add $2.5 trillion dollars to the national debt)
Visit msnbc.com for breaking news, world news, and news about the economy
Where Boehner's reasoning is wrong, is that you can't have it both ways. Republicans since Reaganism during the 80's have held the Laffer curve as dogma, which means that larger tax cuts means more revenue coming in! That's right! The less money you have coming in, the more money comes in! This makes complete sense, doesn't it?
Unfortunately, according to former Fed chair, Alan Greenspan, this economic model does not ring true. You either stimulate the weakened economy driving up your short term deficit or you try and balance your budget as fast as possible with repercussions of systemic unemployment in the high double digits, furthering economic collapse and deepening the debt due to collapse of tax revenues.
Keynes once famously responded to a critique of his economic theory which advocated government intervention to mitigate current economic cycles of recession and depression. Critics posed to Mr. Keynes, "What about the debt the government owes in the long run?"
He replied, "In the long run, we are all dead."
No comments:
Post a Comment