Thursday, October 21, 2004

The Credit Card Debt from Hell

George Bush seems to be using the government as a big credit card. He charges everything and thinks nothing about how to pay it back. When taxes are cut below a level that the government can sustain itself, bad things happen and we, the average people, end up the losers because, like it or not, we will end up paying for it. It didn't work under Reagan, and it will not work now.

First of all, cutting taxes for the wealthy does not spur economic growth nearly as much as a tax cut for the lower and middle classes. When a middle income person pays less in taxes, they use that money to buy real goods. whether it is school supplies, clothing, electronics, etc., it goes back to create jobs for people who make things. When a wealthy person gets a tax cut, it goes into investments. The majority of this is in stocks. When a stock is bought or sold, it creates no new net profits for the company, and the sale itself is just a transfer of money from one person to another. Nothing is made in a factory, nothing is shipped by truck, and nothing is sold on the shelves of your local stores. Therefore cutting taxes for the top does little to create jobs.

Second, running up a huge deficit hurts the average person. When the deficit goes up, most often, so does inflation and interest rates. This means, while you may have extra money in your pocket from the tax cut, you are paying more at the register. You are also paying more on your interest charges for your home, car, student loan, etc. In the end you are no better, if not worse off, than before.

Third, the debt will not just disappear. It is like a credit card. You can charge things and it almost feels like free money, but in the end you still have to pay it back. Not only that, but in the end, because you are paying interest also, so it cost you more money in the long run than if you had paid as you go.

Fourth, government services benefit everyone. Even if you don't directly get a benefit from something, you still benefit indirectly. A good education system not only benefits those who have children in school, but it also benefits those who don't. An educated populace means better jobs (and more taxes into the system). An educated populace means more productive and efficient workers. An educated populace means less crime. An educated populace means less people on welfare. So, you can see that the ramifications of not paying for schools affects everyone. The same for other government services. Take fire departments. A well funded and well staffed fire department benefits you even if your house never burns down. The closer a station is to your house, and the better it can respond to emergencies means lower home owners insurance. Same goes for police departments, etc.

So, in the end, not only is society benefited by government services generally, but you are benefited directly even if you don't see it. Bush's fiscal irresponsibility will hurt you more in the long run than you will gain in the short run. We need to go back to the pay-as-you-go plan under Clinton.

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