Tax Cuts Are Sacred

As exemplified in the comments threads of the last couple of posts, rightie economic “theory” rests on a number of bedrock beliefs that have nothing to do with the real world, but which righties believe to the foundations of their souls. These beliefs cannot be questioned These include —

  • Government is to the economy what a tick is to a dog. Money paid in taxes is lost forever to the national economy.
  • Government jobs are not real jobs. Wages paid to government employees are not real wages. When government employees use their wages to buy stuff, it doesn’t count as a stimulus for business to make more stuff. Only stuff bought with wages from a private sector job can do that.
  • Free markets are forces of nature that self-regulate and grow the economy as long as they aren’t regulated.
  • Private enterprise does everything more efficiently than government bureaucracies.

And now we have one more,

  • Tax cuts to the rich are sacred.

The immortal words of Senator Jon Kyl:

“[Y]ou should never raise taxes in order to cut taxes,” Jon Kyl said on Fox News Sunday. “Surely Congress has the authority, and it would be right to — if we decide we want to cut taxes to spur the economy, not to have to raise taxes in order to offset those costs. You do need to offset the cost of increased spending, and that’s what Republicans object to. But you should never have to offset cost of a deliberate decision to reduce tax rates on Americans.

This was said yesterday on Fox News Sunday. According to Steve Benen, Kyle was responding to a question from Chris Wallace.

Wallace, to his credit, raised a good point — the “Republican growth agenda” is predicated on keeping “the Bush tax cuts for the wealthy.” Wallace said this would cost $678 billion over 10 years, and asked Kyl how the GOP would pay for them. Kyl dodged the question, and talked about how great those tax cuts were.

So, Wallace asked again how the cuts would be paid for. Kyl responded, “You should never raise taxes in order to cut taxes. [etc.]

The Bush tax cuts are the single biggest cause of the current budget deficit. It is an even bigger cause than the Iraq War, and far bigger than all the “entitlement” programs put together when you consider there was a budget surplus before Bush was elected.

Given their recent whining about the deficit, they must have one more rule:

  • Budget deficits caused by tax cuts don’t count. Budget deficits caused by wars don’t count most of the time. However, domestic spending by government causes a different kind of deficit that does count.

As Ezra Klein says, “This sort of comment is how you tell people who care about the deficit apart from people who are interested in exploiting fears of the deficit to shrink the size of government.”

If you can think of any more wingnut economic rules, please add them.

20 thoughts on “Tax Cuts Are Sacred

  1. “You should never raise taxes in order to cut taxes.”

    I don’t get this statement…Can anybody help me out in deciphering what this means? This apparent riddle might have an obvious and simple explanation, but it’s eluding me. Am I alone in not being able to understand this statement?

  2. “Tax cuts to the rich are sacred. ” –Made me think of Monty Python “Every Sperm is Sacred”.

  3. The most obvious Wingnut Economic Law is that Republican Presidents never increase the deficit. History, of course, records that every GOP president in the last 30 years has in fact done so, but what do mere facts matter?

  4. “Raising taxes to cut taxes” means you’re redistributing the tax burden, which is wrong because it implies taxes must go up somewhere. If tax levels ever change, they must only go in one direction: down*.

    *Except the payroll tax — see Reagan & Greenspan’s grand swindle of 1983.

  5. I think the whole “raise taxes to cut taxes” thing was Kyl getting caught up in the logical consequences of an illogical action. See, he knows that cutting taxes as he wants to do would increase the deficit because he actually IS aware that tax cuts don’t raise revenue, and that to raise revenue a rational person would (or Democrats would) want to RAISE taxes, to offset the cost of the tax cuts. But that would be bad (though logically inescapable), so he decides the only way out of that trap while preserving the tax cutting he really wants is to declare that tax cut deficits are special magic that doesn’t require increased revenue or offsets, because Congress can do whatever it wants to stimulate the economy.

    At which point, in a just universe, someone would point out that the Bush tax cuts didn’t stimulate the economy the first time, which is why we are in this mess in the first place, so refusing to offset them on the basis that they are economic stimulus is insane. And then Kyl’s head would explode, or he’d get sucked into a vortex of his own illogic and disappear with a soft “pop”.

    Sadly, we don’t live in that universe.

  6. It should be pointed often that taxes on the rich were lowered but they didn’t create the jobs they were supposed to create. They can’t be trusted with any more tax reductions.

  7. Here’s another economic wingnut rule, one just starting to gain more traction:
    Flat taxes.
    A flat tax has the benefit, to conservatives who push it, of sounding fair, reasonable and logical, but really screws the lower and middle classes, while giving the wealthy a pass.
    That’s a plus/plus!

    As for Senator Kyl, when confronted with a tough question, he just lapsed into some frontier gibberish.
    Sadly, I can’t find my English-Gibberish/Gibberish-English dictionary anymore. I probably lost it in my last move, or threw it out right before Bush left, hoping I’d never need it again. WTF was I THINKING?

  8. Paul O’Neill records for posterity that Dick Cheney, in justifying Bush’s tax cuts for our wealthiest citizens, told a Cabinet meeting: “Reagan showed us that deficits don’t matter.” Thus the Bush II administration’s modus operandi was born.

    How quickly some forget. Of course, Jon Kyl has never demonstrated an understanding of the present, let alone the past.

  9. Senator Kyl, when confronted with a tough question… just lapsed into some frontier gibberish.

    “Yes, Gabby, the president is near.

  10. Then there are the time tested recession Republicant economic rules:

    1. When a republicant administration experiences a recession it is always the fault of the previous democratic administration and or current or previous democratic congressional majority or minority.

    2. When a democratic administration experiences a recession (even if it began under the previous rebublicant administration) it is always the fault of the democratic administration and or current or previous democratic congressional majority or minority.

    4. When the economy grows under a democratic administration it is always due to the previous republicant administration and or previous or current republicant congressional majority or minority.

    5. When the economy grows under a republicant administration it is always because republicants have cut taxes (even when they didn’t).

    In short rules 1 through 5 can be summed up by the conservative golden economic rule: Republicants love American capitalism and Democrats are socialists.

  11. Sadly, I can’t find my English-Gibberish/Gibberish-English dictionary anymore. I probably lost it in my last move, or threw it out right before Bush left, hoping I’d never need it again. WTF was I THINKING?

    LMAO… 🙂 Try Babelfish!

  12. There’s a much bigger problem here; all this nonsense being pushed by the deficit hawks is based on false and dangerously wrong premises. The scary part is that most liberals/progressives do not seem to have a much better grasp on the economics of the situation than the hawks (!)

    For the love of sanity and truth, please read this paper by James K. Galbraith and others: The Case Against Intergenerational Accounting.

    They make a lot of important, fundamental points in the paper. Among the most significant is that government revenue does not fund government expenses. Yes, you read that right. Government programs are not paid for by tax revenue — this is a huge misconception the vast majority of the public seems to believe. Naturally, if taxes don’t pay for spending, they must have another purpose. It’s quite simple and beautiful, actually — taxes create the base demand for the currency in question: in this case U.S. dollars. As a result of the fact that taxes can only be paid in the government-issued currency and not with any other currency or any other commodity, a demand for dollars is guaranteed. Furthermore, the demand for dollars is proportional to the level of taxes, which means the government can increase or decrease that demand by modifying the income tax rates, for instance.

    Note that the above statements are only accurate within the context of certain factors (all of which apply to the U.S dollar). Primarily, those factors are:

    (1) The government is the sole issuer of currency. In other words, it wholly controls the supply of dollars (whether physical paper or virtual numbers in a machine).

    (2) Taxes exist, are enforced, and are significant enough to have a noticeable economic effect.

    (3) The government is sovereign, stable, and legitimate. This is important, because it’s what causes the currency to be used by the population and the broader economy for the sale of goods and services. If there’s a genuine danger that the government will be overthrown, any economic scheme will fall apart.

    Note what these factors essentially imply: the government has nearly limitless power over the supply and demand of a necessary commodity, as well as the political, social, and/or military power to enforce the rules surrounding the use of that commodity.

    Under these circumstances, talking about the government needing to raise revenue to spend is utter nonsense. Deficit spending by the government is what creates the money supply in the first place. This supposedly egregious deficit is nothing more than putting money into the hands of the private and foreign sector, which clearly have a demand for it. The deficit of the public sector is a surplus in the private sector — the money created doesn’t simply vanish into nothing.

    As to debts/interest owed to other nations, the Treasury is not forced to issue bonds or other treasury bills to cover spending costs. That is entirely procedural and political. If you want to stop the growth of foreign debts, stop issuing treasury bills to other countries. It really is that simple. Other countries buy those bonds (and similarly accept dollars generally) because they find them to be a very reliable return on investment. They’re just another way to generate demand for the government-monopolized currency.

    It’s not as though we have any real reason to discourage that demand by stopping the issuance of bonds, though. As mentioned before, the Treasury is in full control of the supply. There’s no risk of running out of dollars to pay interest on bonds — we are the bank, we make the rules. It’s no different than claiming you will run out of monopoly money, or your accounting variable will run out of numbers. There is no operational ceiling to these things.

    There is a practical ceiling, of course. If you increase supply too quickly (much faster than demand), you will cause inflation. That’s just the simple economics of it. However, the important thing to note here is that we’re not seeing any substantial inflation. Even after nearly a decade now of deficit spending, there is still very little inflation to speak of. Sure, interest rates went down (the treasury rates are near zero). That’s not an especially unusual or difficult thing — try googling “the natural rate of interest is zero” sometime. A higher base (treasury) interest rate than zero is merely the government’s meddling in the economy, whether for good or bad. Since the treasury (and the government more generally) have other controls available to them, this is not a dangerous or unsustainable situation. Mostly, it means that profit margins for banks aren’t as large as they otherwise would be.

    All of this raises the question — what are the deficit hawks really after, if there’s no genuine reason to constrain government spending (especially during a recession, and most especially on projects with long-term economic value)? From my standpoint, it seems to be one thing and one thing in particular. They’re intending to further dismantle public sector programs and services in order to force the demand for those very services back into the private sector (where, of course, they will be subject to profit margins and market manipulation/segmentation). Most probably, they see political gains and potential consolidation of electoral segments they have trouble reaching now in addition to that. For example, the elderly tend to vote almost reflexively against any politician who would dismantle Social Security or Medicare, so politicians wishing to privatize those services cannot gain many votes in that segment. But destroy those programs outright on false pretenses and the voting block falls apart, probably permanently.

    There’s still time, I think, to stop a collapse into oligarchy (or plutocracy). But it depends on people waking up and looking at the reality of the economic and political situation in the country, and not listening to fools on television spout things they’re paid to say unchallenged without even a single reference or credible supporting fact.

  13. It should be pointed often that taxes on the rich were lowered but they didn’t create the jobs they were supposed to create. They can’t be trusted with any more tax reductions.

    Was it on this thread or somewhere else that I read “The rich don’t get rich by letting money trickle through their fingers.” – on the trickle-down economic theory?

    Translation of Kyl’s remark: “You should never raise taxes [on the rich] in order to cut taxes [for the poor little people].”

  14. PurpleGirl:

    Tax cuts for the rich are like offshoring. By offshoring, people will make more money. And once they have more money, they’ll create more jobs. And they’ll create those jobs… uh… offshore… because they’re cheaper….

    LOOK OVER THERE! Barack HUSSEIN Obama is a socialist! Health care reform means rationing!

  15. It should be pointed often that taxes on the rich were lowered but they didn’t create the jobs they were supposed to create. They can’t be trusted with any more tax reductions.

    It should be pointed out more frequently that when this tax-cuts-for-the-rich party began, it was supposed to make things BETTER, not “same as before but with bridges that fall down and cities that drown and oil gushers that can’t be capped.”

    Ultimately, the GOP only has one bedrock belief: Fuck You. It all flows from that.

  16. It *is* crazy how taxes paid to government vanish entirely – rather than paying off defense contractors, or investors who hold government bonds, or any of those other things.

    I’m starting to think that GOPers who bring up this bullshit need to be asked “Listen, are you mixing the Kool-Aid or drinking it? Because if you’re mixing it, you’re an evil, despicable liar, and if you’re drinking it, you’re a dope. And I just want to know if you’re evil or stupid.”

  17. with nary a care
    and spite as a whim
    a republican economy
    means you sink or swim

    trickle down effect
    less for the masses
    the rich bastards laugh
    poor get off your asses

    stop deficit spending
    we’ll all end up broke
    cut taxes for the rich
    is a policy not a joke

    these deft simpletons
    in the face of all reason
    have utterly, absolutely
    created economic treason

    their failure is large
    broad , vile, immense
    so many now helpless
    yet trillions on Defense

    where will this all lead
    just what’s the endgame
    will the purveyors of failure
    ever rightly face blame

    how many Gulf Coasts
    another Prince William Sound
    add a Wall Street debacle
    and this country goes down

  18. The trickle-down theory supposed that the tax cuts to the rich would “trickle down” in the form of good things like more jobs for the poor.

    The trouble with this analogy is that shit also trickles down, and there’s a lot more of it.

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