Who will pay for the wars?
Bruce Bartlett, a former Treasury Department economist during the Reagan Administration, is “packing heat,” journalistically speaking, in a weekly column at Forbes. Bruce, who was part of Reagan’s tax-cutting supply-side economics team, was recently kicked out of a conservative think tank for criticising Republicans and backing Obama’s stimulus package. Here’s a sample from last week’s column:
In recent years, Republicans have been characterized by two principal positions: They like starting wars and don’t like paying for them. George W. Bush initiated two major wars in Iraq and Afghanistan, but adamantly refused to pay for either of them by cutting non-military spending or raising taxes. Indeed, at his behest, Congress actually cut taxes and established a massive new entitlement program, Medicare Part D…
However, Bush and his party, which controlled Congress from 2001 to 2006, never asked for sacrifices from anyone except those in our nation’s military and their families.
As the Tea Party folks and others hound Obama about the costs of providing health care to more Americans, will they at least step up and pay for the wars in Iraq and Afghanistan?
Bruce Barlett has a new book out: The New American Economy: The Failure of Reaganomics and a New Way Forward
In it, Bartlett argues that today’s economic circumstances are a far cry from what they were when Reagan took office. Interest rates were high then, they are low now. Inflation was high then. Now deflation, especially of real estate values, is a problem.
In 1981, bracket creep caused by double-digit inflation forced Americans to pay a higher percentage of their incomes to the tax man, while at the same time consumer prices were going up. These higher taxes were bad for consumers, but they paid down the federal deficit to a very low level. Today, the deficit’s too high.
Today, Bartlett argues, tax cuts make no sense because incomes and income tax revenues are down, profits are down, and, at the time the book was written, stocks were down. Taxes now are low by historic standards, especially for a country at war.
As the economy improves, will the politicians ever have the guts to ask the nation to pay its bills?
Tags: Bruce Bartlett, deficit, Obama stimulus, Reaganomics, supply-side economics, Taxes, TEA Party, Wars in Iraq and Afghanistan