The discussion of the "surprise"
reduction in the deficit is the talk of the internet today. While I'm happy that we're not as deep in the hole as we all thought, I'd like to try to point out some things that people are forgetting.
1) The Tax reductions created the increased revenues: Conservatives and Republicans are scrambling over themselves to find charts, tables, numbers, indeed anything that supports the idea that the tax reduction created and/or enhanced this increase in revenues. However, they are all making one of the largest fallacies known to man (see the subject). That Latin phrase translates as "After this, therefore because of this" and it means that people assume that just because something happened after a certain event that it was caused by that event. In this case we have a nugget of truth that can allow us to get blinded to reality. The tax reductions were done at pretty much the bottom of the recession. They did NOT reverse the recession (which was mild at worst) but they did help to accelerate us out of the recession. Reducing taxes is one of the things that government is supposed to do during a recession (coupled with increasing spending) and that fact is Economics 101.
2) One of the items being pointed out is that capital gains taxes (rates) were cut heavily while the actual revenues from the taxes increased significantly. Unfortunately, this is largely due to people cashing out long term holdings while tax rates are perceived to be at (or near) their lowest. Additionally, like the item above, the tax cuts happened at a particularly bad time for the market... As the market rises, so do capital gains. To be fair, there is some element of truth to the notion that the market has risen because this asset class (securities) has become more attractive. I believe that that is just a partial reason, however.
3) We're sitting here trumpeting the fact that we're "only" running a deficit of $296 Billion dollars... Let's not forget that our deficit is the part ADDED to the debt each year. A $296 Billion dollar deficit still means that we're spending $296 Billion dollars more than we're bringing in... For those of you that need a visual, that's $296,000,000, 000.00... While I'm glad that we're not at the previously projected $423 Billion, I'm not too psyched about the fact that we're in a pretty strong recovery and we can't get closer to balanced.
4) And the notion of balance brings up a good point. As Americans we need to face a hard truth. If we're ever going to get the debt reduced we're going to have to accept a period of time in which the government collects more money then it spends. This is the price we pay for the flagrantly bad spending of the previous generation. While Republicans (and not just a few Democrats) were screaming about reducing tax rates during the few surplus years, we should have been throwing all of that money into the debt and social security. Instead, we saw the evisceration of that surplus because people just don't understand. The
current debt per person is $28,144.08. Much of that debt is kept, "In the family" but a significant portion (
roughly 2.2 Trillion ) is owed to foreign investors.
Here's the things that I'd like to see done:
1) Establish a committee in congress that approves all spending items prior to assignment of a locale. A seperate group should then decide the logical place for such spending.
2) For those items that inherently have a locale attached to them, the congressmen of that area, region or district should abstain from voting.
3) Amendments to bills that do not have anything to do with the core operations of that bill should be allowed to be gaveled out of order with a 3/5ths majority needed to override.
4) ALL bills should be placed on the government website no less than 10 business days in advance of a vote.
If those steps are made, I believe that alot of the wasteful and ridiculous spending that the government does could be reigned in. Anyone know a congressman I could call?
