Ronald Reagan and the radical Republicans elected in 1980 implemented a policy Tip O'Neill labeled "Starve the Beast". For those who are unfamiliar with the plan, the plan was to run up huge deficits and government debt until the crises was so bad they could dismantle all the progressive gains that were made over decades by slashing spending in the name of deficit reduction. The cat food commission was evidence that the plan has worked.
I wrote a diary about this back in July 2009:
Reagan-wins,-Obama-Progressives-lose
I was obviously wrong in believing President Obama was being misled into supporting the Starve the beast stimulus I.
Every dollar in tax cuts, no matter where they come from, is a future cut in government spending, and a very near future cut.
The economics of Obama's Starve the Beast II is devastating. Estimates of as high as $700 billion/year will be added to the deficit. If you think cat food commission 1 had some draconian cuts in social programs, while of course adding even MORE tax cuts for the rich, what do you think cat food commission 2 will propose, especially if its created by a Republican or even Obama?
Letting ALL the tax cuts expire was the right thing to do, economically, morally, and politically. But the capitulator in chief, continues to act like the junior senator from Illinois, or to believe he should run to the right by sticking another thumb in the eye of progressives (I'm beginning to wonder just how many thumbs this guy has!).
You'll here many arguments from the right that will claim you can't raise taxes in a recession. Let's put that foolish and ridiculous argument to rest right now. Deep throat in the watergate stories, kept telling the reporters to follow the money. That's all you have to do, follow where the dollars of a tax increase would go.
By definition, a government running a deficit spends ALL the revenues it takes in. So the only question is, is it better for the economy if the government receives and spends the revenues, and reduces it's deficits in the process, or is it better for the upper income people (who pay most of the taxes) to pay down debt, or buy gold, or invest in emerging market stock markets...? I have no doubt, that even with the government waste, dollars that get cycled through the government will get spent on more stimulative expenses than dollars that end up in upper income pockets. Let me qualify this by saying this is true under THESE economic conditions. If the government has little debt and was running surpluses, this might not apply.
Speaking of stimulus, some are going to try and label these massive tax cuts as a stimulus II package. We've already demonstrated that tax cuts are a horrible way to stimulate the economy. Stimulus I was an extremely poor, undirected package, that consisted of a large tax cut, increased the deficit (remember, this type of deficit spending = future cuts in social programs), and had almost NO effect on long term economic growth. This new tax cut stimulus will be much worse than stimulus I and may very well lead to repeal of Obama's capitulated health care plan, or worse, amendment of the plan to take away supports for the needy in favor of the insurance companies.
The President, whether through ignorance, or by being misled by his advisors, or by an acceptance of the Republican philosophy of bankrupting the nation as a way to dismantle regulations so the wealthy can pillage what is left of our society, Starve the Beast II is now the policy of this administration.
The devastation the ultimate consequences of draconian cuts in government social programs, and the empowering of the already powerful Oligarchs that control our country, will rapidly make America another banana republic 3rd world country. Under these policies, you truly will not recognize this country in 10 years.
I can not in good conscience, support policies, or individuals that will support such policies, that will lead to such a division of wealth in my country that a new era of demagogues will manipulate the 10's of millions of the newly desperate poor into voting for even more draconian policies that could ultimately end in violence, or the loss of fundamental rights of large groups of our fellow citizens, as scapegoats are sought as the cause of the incredible problems created by these policies.
The opportunities have been squandered, the policies have been wrong for the country, the compromises have been nothing more than capitulations, it's truly is time for CHANGE.