DO DEFICITS MATTER?
The attached segment is from a conversation on CNBC regarding the deficits. I found it extremely interesting to see 4 deficit hawks arguing their points and concluding many of the same things I have been saying for a long time. The topic was government deficits and whether they matter.
They’re all worried about the size of the deficit and though none of them directly says we’re Greece the thinking is obviously there. They all believe the US government is like a household that is revenue constrained (Rick Santelli actually makes that exact comparison). This is obviously wrong as I’ve explained numerous times. Anyone who understands how the banking system actually works can see, from an operational perspective, that taxes and bonds fund nothing in the USA (a country with monetary sovereignty in a floating exchange rate system). Therefore it is incorrect to imply that the USA is revenue constrained or at risk of default (in the same way Greece is).
Steve Moore and Larry Kudlow call for tax cuts. They’re both dead right. Rick Santelli calls for a heavy dose of Austrian pain and says we need to cut spending. I agree in part – it’s time to take the spending decisions out of the hands of the government and put it into the hands of the people. It’s also time to impose austerity on the banks. Stop funding and promoting their speculative behavior. This country is not great because of the greatness of its banks. In fact, as we’ve seen over the last 25 years, the stronger the banking sector the more fragile the economy.
So it’s curious to me why we keep talking about raising taxes while Ben Bernanke keeps concocting plans to help the banks (such as QE2). By this point I think we all have recognized the economic hurdles we confront. Everyone in this segment agrees that we need to grow our way out of this mess, however, how can we expect to grow our way out of this mess when the government is imposing austerity measures on us all? A tax cut appears like the only feasible political response at this point. It won’t fix all of our problems, but it certainly won’t make them worse. The deficit hawks appear to agree.
If the recipe for success is to cut taxes, lets remove all of them. We should live long and prosper, right?
LOL. Tax cuts. You have to be kidding. With Obama/Pelosi/Reid controlling the levers in the District of Criminality (D.C.) the chances of a tax cut are less than the chances of space aliens landing on earth and sharing their perpetual motion technology with us.
Why does everyone always refer to the Bush tax cuts expiring as a generality? It is only for those above 250K taxable income, and even that would bring them back up to levels of 2001, not the end of the world. Considering that the Iraq war was funded by borrowing and pillaging social security coffers and that common folks paid for it with their lives, it’s time those who never served pay their share. Cutting taxes in time of war, like any old time soldier will tell you, is the most un-patriotic act we have ever witnessed as a country. And to now slap the 1 trillion dollar war bill on our kids is just plain wrong. This is not about republican or Democrat, it is about Americans who hollered for war but never sacrificed anything.
“Grow our way our of mess” is a fairy tale from those who sit on the receiving end of money printing designed to fool majority on the other side forever.
We already grew 2/3 of wealth to top 1% people in last 10 years, yet these cronies still want to grow. We may or may not grow out of trouble but these top 1% will get grow their wealth to 90%. That is for sure.
And please do not bring up Kudlow, that pompous fairy who was pushing for war AND tax cuts.