Taking us over the cliff

Kash has a great post up at The American Street about the underlying causes of the soaring federal deficit. The bottom line:

The conclusion is straightforward. Our current budget problems can largely be blamed on the tax cuts, not the state of the economy or spending increases. Reverse the tax cuts, and keep everything else the same, and our budget problems would be gone.

Unfortunately, you may recall, Geroge Bush actually called upon Congress to make his tax cuts permanent in the most recent State of the Union Address:

Unless you act, Americans face a tax increase. What Congress has given, the Congress should not take away. For the sake of job growth, the tax cuts you passed should be permanent.

Bush, of course, was promoting the GOP's Bizarro World logic on this matter, calling a repeal of the future cuts "a tax increase." This is up-is-downism: A tax cut rolls back something already in place. Repealing such a cut merely means maintaining that which is already in place. It is NOT an "increase."

While all this may seem simply the purview of economists and wonks arguing over facts and figures, it has egregious long-term consequences. One of these, of course, is that whatever "recovery" we may be seeing now will not last beyond a quarter or two. The clue should be that this is what we are calling the "jobless recovery," which now joins the Lexicon of Oxymorons alongside "compassionate conservatism" and "honest Republican."

We may indeed, as Paul Krugman has consistently warned, be heading off a cliff to an economic disaster of historic proportions. Recall, if you will, that only a few weeks ago the IMF warned that America's mounting trade deficit "threatens the financial stability of the global economy," and noted that in tandem with the out-of-control budget deficit, the day may be coming when the United States is declared a bad debt risk.

Bush's response? "White House officials dismissed the report as alarmist, saying that President Bush has already vowed to reduce the budget deficit by half over the next five years."

How do they intend to achieve this? By cutting taxes (with an emphasis on the wealthiest 1 percent) and slashing spending -- which means gutting the social infrastructure.

This is simply a reiteration of the "trickle-down" economics of the Reagan administration, which created (until Bush) the largest deficits in history and one of the worst economies since the Depression (prior to this one, of course). The logic on which they are predicated is simple: Give a lot of money to people at the top, and they will make it flow downward to the middle and lower classes by creating jobs and spending. The problem with that logic was reality; as we saw in the 1980s, the upper classes did not invest in jobs; they simply hoarded more of the wealth for themselves.

Ultimately, the problem is a simple one: As long as George W. Bush is president, there is simply no prospect in sight of getting the deficits under control.

And that makes the solution, really, a very simple one as well.