Sharing The Sacrifice

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Posted on : 9/28/2010 05:14:00 PM | By : Dann | In : , , ,

Ezra Klein brings us the news that the director of the CBO is projecting that extending the Bush era tax cuts will result in lower revenue and thus higher deficits.

Elmendorf doesn't deny that tax cuts stimulate the economy. But they don't stimulate it that much, he says, and over the long run, the net economic growth from the tax cuts will be quite small. The net deficit impact won't be. "Lower tax revenues increase budget deficits and thereby government borrowing," Elmendorf said, "which crowds out investment, while lower tax rates increase people’s saving and work effort; the net effect on economic activity depends on the balance of those forces." True to form, he brought a graph:
The graph and the rest of Ezra's pontification are at the link.

One supposes based on the selective quoting involved that Ezra may not have heard of the other solution for deficit problems.  The director of the CBO has.

It is called "cutting spending".  You can get burned at the stake for uttering such word in Washington D.C.

Unfortunately, the GOP likes to talk about tax cuts while offering vague and ill defined spending cuts that take place in the future.  Equally unfortunate is the Democrats' penchant for raising taxes at the drop of a hat while exhibiting behavior that suggests that they have never met a government program that was not worth funding.

We are quickly approaching dire straights.  The best course out of that situation will require a little sacrifice by everyone.

Until someone begins to seriously discuss across the board spending cuts, there is no reason to increase taxes.  Shared sacrifice means that those on the receiving end will have to pony  up as well.

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