The nonsensical Republican line about revenues

As Republicans throw a hissy fit that could well plunge the entire globe into economic chaos, it’s important to remember the point that they are willing to go to the mat over: Even though they insist the deficit is an urgent and immediate crisis (it is not), their line-in-the-sand is that it must be dealt with only through draconian spending cuts. Increasing revenue cannot be part of the equation. “We have a spending problem, not a revenue problem,” they insist.

This, of course, makes no sense. For one thing, we clearly do have a revenue problem. Tax revenue is at its lowest percentage of GDP since 1950. Look at the chart to the left and you’ll see that the decline in revenue associated with the recession is responsible for about a third of the current deficit. Bush-era tax cuts, it should be noted, are responsible for about a quarter of the current deficit. Increased spending responding to the recession makes up a significant portion now, but that will fade quickly as the stimulus money is spent.

So, yes, we have a revenue problem. Long-term, we also have a spending problem, but it is mostly associated with demographics and health care inflation. We can’t do much about the first part. The baby boomers will age. The Obama administration is working on the second part, and getting precious little help from Republicans, who think the best way to handle it is to shift costs directly onto the elderly.

But Republicans won’t hear of increasing tax rates or getting rid of tax breaks for industries that no longer need them. They insist, despite all evidence to the contrary, that low tax rates are the key to economic growth. Never mind the fact that over the last several decades, the most robust growth has actually been when tax rates were higher. Never mind that the low tax rates they insist will lead to prosperity have been in place for the last 10 years, and were in place during the worst recession since the Great Depression.

As Fareed Zakaria recently wrote, today’s conservatives have lost touch with reality. “Conservatives now espouse ideas drawn from abstract principles with little regard to the realities of America’s present or past.”

And they are willing to risk a global economic meltdown to force those unrealistic principles onto the public. What is happening with today’s Republican Party is a disgrace and a looming national tragedy.

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