Republican#039;s fiscal principles leave poor even poorer

Published 12:00 am Friday, July 8, 2005

Reaganomics really was more than "trickle down" policies, that is, the idea that, by cutting the taxes on the wealthiest Americans the net effect would be that they would hire the rest of us from their increased disposable income.

Reaganomics also reduced income flowing into the U.S. Treasury by the tax cuts taken.

This collection reduction, combined with a large increase in the military budget, was the heart of his fiscal policy. The net effect of Reaganomics was incredible deficit spending by the U.S. government.

Email newsletter signup

The deficits only ended in the 1990s, as a result of long-term economic growth combined with a good degree of fiscal sanity.

In 2001, the new president, facing an economy in a recession, told the country that we needed a significant tax cut in order to bring us out of the recession.

Congress accepted this prescription and the tax cut took place. The economy did get better, not quickly, and not with much gusto in many sectors, but the deficit did come back as a by-product of the tax cuts, and a residue of the recession.

And in spite of theoretical pundits who say tax cuts actually increase revenue, this tax cut reduced revenue going into the treasury.

Now we live with significant revenue shortfalls even with the cost of the war not included in the budget numbers. President Bush now advocates making the tax cuts permanent.

What is the logic of the president's argument for making the tax cuts permanent? When we were in recession the argument was that the cuts were the only way out of recession. Now the argument is we can't afford a tax increase in a good economy.

If I understand this argument, in bad times we have to cut taxes, and in good times we have to cut taxes.

In essence, regardless of circumstances we have to cut taxes. Now, I am not against keeping more of my money.

But I am against huge deficits. Big deficits will inevitably bring high interest rates, and as surely as we are here today, interest rates will go up. Big deficits have also brought foreign debt holders into the mix, and I am not happy about China deciding if they will extend us good terms on a loan.

This just seems against our national interests.

I am not in favor of underfunding Medicaid or the WIC program that assures pregnant women of proper care or heating allowances in the winter for struggling Americans.

I am not in favor of cutting support for MRDD services that protect our most challenged citizens. In the end, we are trading higher interest rates for lower taxes on the richest Americans, who, if the tax cuts are made permanent, will pay a lower federal tax rate than families that make $100,000 to $200,000 per year.

Here is what I have learned about the most recent Republican budgets. Republicans create huge deficits (see Reagan, Bush One and Bush Two) and spend the money on the military and cut social programs.

Republicans tell us they practice fiscal responsibility, and they do, but only against the poorest of Americans.

Guns or butter? Pass the butter and restore our historical care for those who need our help.

Jim Crawford is employed at Ohio University and is a partner in Interconnections, LLC, a tri-state strategic planning consultancy. He can be reached at The views expressed by Dr. Crawford are his and his alone, and do not represent the views of Ohio University or Interconnections, LLC.