Republicans and Dr. Strangelove
Or learning to Cut Taxes and Love the Deficit.
Brad McGrew with Jennifer Johnson
It has taken the Democrats forever to catch on to what has happened to the political debate in this country. The Republicans have learned to cut taxes and love the deficit.
Conservatives like Barry Goldwater and Everett Dirksen (even Prescott Bush) would not recognize their Republican party. These men were the old-style conservatives: while they did not want to increase government spending, they believed any spending must be paid for.
This changed with Ronald Reagan and what George Bush the first referred to as voodoo economics. Why have conservatives decided on cutting taxes and the hell with the deficit? Could it be that deficits actually work in favor of the rich, who are the Republicans consistency?
The cry for a flat tax or even a consumption (or sales) tax has been proposed by conservatives since the election of Ronald Reagan. The idea that all should pay the same for the financing of the federal government has long been an idea that appeals the wealthy in this country. However, it has never really caught on as a popular cause outside of the right wing of the Republican Party.
This was the beauty (in the eyes of conservatives) of the Reagan deficits and how they worked with the tax cuts in the eighties. They cut taxes and blamed the Democrats for the spending even though the vast majority of the spending was caused by mandated programs (such as Social Security and Medicaid) outside the control of Congress.
So how does this work if we run deficits? It's simple: if the Federal government spends more than it takes in, then it just prints money to cover the difference. In the long run, the rules of supply and demand triumph, and the supply of money will exceed the demand for it. When this happens inflation sets in, money is worth less, and assets are worth more. As this happens, all goods and services rise in price, costing all Americans more to live.
Inflation amounts to a consumption tax, which is hardest on people who consume all of their income, especially the working poor. Inflation effectively gives many conservatives the tax they consider the most fair, a national sales tax. A consumption tax in effect gives the rich a pass on paying taxes earnings from business investments, stocks and bonds.
The rate of return on financial investments will adjust upward as the free market accounts for effects of inflation on rates of returns, consumers will pay an increasingly higher rate on borrowings. In effect, consumers will pay a consumption tax on money they borrow just to make ends meet.
Republicans like George W. Bush, Dick Armey and Tom Delay are dumb like a fox. They want to cut taxes at all cost - and if the Democrats get their programs through, they will be paid for with a national sales tax better know as inflation. Their constituents (the super rich) only consume a small portion of their income, while investing the bulk of their income in assets such as houses and business assets that will increase in value with inflation.
All progressives should realize that any government program must be funded. If not funded by a progressive income tax, it will be funded by a cruel consumption tax affecting negatively the very people the program was designed to help. The Bush tax plan causes the middle class to pay more in taxes, and is designed by the Republicans to foster the very class war they decry.
You have always known that Republicans wanted to cut taxes. Now you know why they love the deficit.