POLITICS, ECONOMICS and REALITY

(First Published, October, 2011)

 In the 2010 mid-term elections, Tea Party opposition to President Barack Obama's policies successfully incited voter fear of economic uncertainty to reduce the Democrat majority in the 100-member Senate to just six seats and eliminate their majority in the House of Representatives.

But momentum left the presidential contest for this self-proclaimed, fiscally conservative movement when former Alaska governor Sarah Palin did not run and Texas Governor Rick Perry and Congresswoman Michele Bachmann slipped in polls.  Perhaps the public is paying attention to the reality, not the rhetoric.

Tea Party rhetoric contends they favor lower spending and smaller government.  If true, Tea Party reduced spending targets must include oil, tobacco, commerce, aid to other countries, etc., that, in reality, subsidize U.S. business—or corporate welfare, if we use the same political label as used for social program targets.  Don’t forget military spending targets (or the failed drug war) as it is inflationary when we stockpile or use our own weapons instead of sell them.

And so it goes....the Tea Party implodes the GOP from the monster within that refuses to believe or understand reality.

Do people think you can just wave a magic wand and make a $14 trillion deficit disappear?  How do these people absolutely refuse to acknowledge that the problem to solve is how we increase revenue?

They truly believe we can balance the budget by making many small cuts to things like Planned Parenthood and NPR, yet provide $1 trillion to financial institutions so executives won’t lose their personal investments because of their own bad decisions that were made from greed and selfishness.

The reality again, is that a more balanced budget requires overhauls of almost every system in the budget—including where to get increased revenue.  In the past, economic policy was to “grow out of our financial problems” because revenues would increase as did the population.  That doesn’t work anymore for several reasons including global competition and reduced birth rates.  It's just that simple.

Most increase in the federal deficit in the past 10 years results from declining tax revenues, not out-of-control spending as advocates of smaller government proclaim.  Another reality check:

      FY2000 (from CBO)          FY2010

Federal Tax Revenues                                  $2.025 trillion                     $  2.161 trillion

US Gross Domestic Product (GDP)               $9.825 trillion                     $14.660 trillion

Tax revenues / GDP                                      20.6%                               14.8%

Notice that GDP substantially grew from 2000 to 2010, but tax revenues barely budged.  For the GOP to claim that spending is the main cause of our deficit is another Big Lie in the tradition of “it is true if you believe or say it.”

A decline in federal tax revenues, which fell from 20.6% of GDP in 2000 to 14.8% of GDP in 2010, accounts for more than half of our current budget deficit.  So, for the GOP to reject a tax increase to higher income groups to replace these lost tax revenues is completely irresponsible—even treasonous in another time—but never patriotic.

Why tax “corporations and the ‘rich’?”  The answer:  because they started a lot of this mess and it’s just their turn to help responsibly fix it. 

There are two special reasons for the lower tax revenues.  Corporate outsourcing created an oversupply of American labor and a shortage of jobs.  Then the American middle class wage deteriorated because the law of supply and demand for labor said business could pay less for the same work.  The result is that 47% of households in American have lower incomes so they won’t pay the same federal income taxes they paid in previous years.  Reduced Corporate tax rates and subsidies continued during the same period.

The other reason for the tax shortfall is that GOP campaign contributions swelled from those other income groups whose income did not fall proportionally.  The GOP returns the favor and blocks anything that raises corporate or upper income levels taxes.  When our large corporations (Bank of America, Exxon, General Electric, Google, etc.) paid no taxes last year, how can increasing their tax rate from 25% to 30% affect them, anyway?

The New Reality is that wealth has thus concentrated in the hands of a few as never before in American history--1% of the population controls over 95% of the wealth in this country.  The GOP budget plan gives even lower tax rates for the corporate and upper income groups while cutting deductions for the middle class based on the old “trickle down” argument.  General Motors used a variation on this philosophy when its mantra was “What’s good for GM is good for America.”  It didn’t work then and it doesn’t work now.

The final reality is that the Tea Party was never about reduced government spending unless it was reducing priorities on social policies or safety nets for the “common good,” emphasis on common, like in our Constitution.  They are the same group that call themselves the Christian majority, though there is nothing Christian about what they do or say, either.