It was not long ago that Republicans succeeded in holding unemployment benefits hostage to a renewal of the high-end Bush-era income tax cuts and — as a little bonus — won deep estate tax cuts for America’s wealthiest heirs. Those cuts will add nearly $140 billion to the deficit in the near term, while doing far less to prod the economy than if the money had been spent more wisely.
Let us review. There were no tax cuts on the table, there was simply the decision to maintain the status quo or raise taxes. Any additions to the deficit have nothing to do with the tax rate charged, as once again, it is status quo. Any deficit increase is therefore wholly attributable to spending.
The new Republican rules will gut pay-as-you-go because they require offsets only for entitlement increases, not for tax cuts. In effect, the new rules will codify the Republican fantasy that tax cuts do not deepen the deficit.
This is not fantasy, this is reality. Tax cuts NEVER have to "pay" for themselves, but spending must. This distinction flows from the metaphysical truth that the government has no money of its own, only the money it collects from its citizens. When the citizens (through their representatives) decide to limit that collection, government must responsively limit its operations as a result.
It gets worse. The new rules mandate that entitlement-spending increases be offset by spending cuts only — and actually bar the House from raising taxes to pay for such spending.
This is worse? Why? Why are tax increases "sensible", but benefit/spending cuts are not?
For example, the cost to make the Bush-era tax cuts permanent would be ignored, as would the fiscal effects of repealing the health reform law. At the same time, the new rules bar the renewal of aid for low-income working families — extended temporarily in the recent tax-cut deal — unless it is fully paid for.
Repeat again after me. Tax cuts don't "cost" anything, they simply represent a larger share of productive labor retaining its fruits. Asserting that a tax cut "costs" something assumes that spending must be considered as a constant. This is of course, not true.
The NYT represents a view of the relationship between the governed and the government that was largely repudiated in the last election, and to some extent, by the politics of the last three decades (2008 being anomalous). Its readership is declining consistent with the relevance of its editorial views.
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