Well, no, the republican notion would be more general tax cuts, including those on the wealthy.
While many people may be under the belief that such tax cuts cannot possibly improve the economy, I believe they are mistaken. A more correct view would be that tax cuts targeted ONLY at the wealthy will not ALWAYS improve the economy.
A number of mechanisms can explain perfectly legitimate means by which high income tax cuts can spur economic growth. For instance, one way would be be allowing many small businesses to potentially keep more of their earnings, build up cash reserves, and then expand. Since many small businesses do not pay corporate income taxes, but instead pay individual income taxes (potentially at the top bracket), such taxes can pull money from those businesses, which can then potentially hinder economic growth. Currently, about 40-50% of income for small businesses is taxed in this way, I believe, and accounts for around 35% of all the tax revenue coming from businesses in the US.
I think that perhaps it would be useful to create a more progressive bracket system, which had the higher brackets at higher dollar amounts, like one over a million dollars.
In terms of capital gains taxes, it seems even more clear how that would tend to spur economic growth, as you are essentially increasing liquidity in the market. Here, you can see an opinion piece from Forbes that touches on some of the potential issues that stem from capital gains taxes.
While it doesn’t makes sense to embrace the dogmatic view that taxes should never go up, and that cutting them automatically increases economic growth, it’s equally naive to pretend that high tax rates only “soak the rich who can afford it” and have no impact on the rest of the society. Anything that slows economic growth harms everyone, generally the poorest members of society the most.
One of the problems with our tax system, in my opinion, is not that the tax rates are too low (I think in many cases they are in fact too high), but rather that many people are able to use loopholes to avoid paying the taxes that they would otherwise be expected to pay. When you have stories like Soros paying less than his secretary, or super rich folks having an effective income tax rate of less than 10%, the system isn’t working as intended. Which then makes the issue of arguing to raise or lower taxes overly complex, because it obfuscates who will actually be subject to those tax changes.
If it was just that though, if the GOP truly believes that federal spending is inefficient and debt and deficit are a problem that needs fixing right now, I could live with that - even though I never hear any Republican connect the dots between how “out of control” federal spending is supposedly ruining the economy.
At this point in history, the US economy is so powerful that we are able to kind of “get away with” huge spending. Because on some level we’re “the only game in town”. Even at very low interest rates, investors continue to pump money into our country because it’s basically a “sure thing”. But it’s unwise to believe that is guaranteed to always be the case. Building up a huge debt is potentially disasterous in the long term, when you eventually get to the point where you can’t pay it, default, then no one is willing to lend you money any more and you cannot pay for the services you use. I mean, we’re seeing this in Greece. While the US certainly isn’t Greece, it’s kind of absurd to just try and handwave away trillions of dollars in debt as though it doesn’t matter.
Also, as that debt increases, it means we’re paying a larger and larger chunk of money just on the interest every year. In 2013, we paid around $413 billion, just to service the debt. Everything else aside, that’s a huge amount of money. And if interest rates were higher we’d be cranking out even more in interest payments.
Tossing aside the gloom and doom notions of economic apocalypse, just consider the more concrete question of, “What could we do with $413 billion dollars?” You can do a lot of shit with $413 billion dollars. To put that in perspective, we give NASA $17 billion. So the interest payments on our debt could fund NASA 24 times over. Imagine the shit we could do if we gave NASA 24 times as much money. So, if nothing else, our huge debt means that we are basically wasting a huge amount of money.
Healthcare, defense and social security are the largest budget drivers. Social security can easily get fixed without raising the retirement age. We spend a ridiculous amount of money on defense and it baffles no one is saying we should spend less. Rising healthcare costs is a major problem. I have no idea how that’s supposed to get fixed.
Well, I’m not sure we can really fix social security without raising the retirement age. At least, I haven’t seen any plan which seems feasible, but I’d be interested in learning more about it. But you’re absolutely right that medicare and social security entitlements constitute the vast majority of the bugetary problem we face. And yes, Healthcare costs are a massive part of that. I’m generally of the belief that a major driver of healthcare cost increases stems from the way in which we tend to pay for healthcare. Since consumers are generally “motivated buyers” in many cases and can’t really afford to shop around when they are dying, it can distort the market. Beyond that though, even for routine preventive care, the way insurance works in our country means that healthcare costs are generally opaque to consumers, which essentially prevents them from acting as rational actors, which removes one of the normal downward forces on prices.
In terms of defense spending, it’s worth noting that the US position, militarily, is somewhat unique. A major aspect of this can be seen when you look at one of the chief missions of the US Navy; to ensure free and open seas. A big part of that involves projection of power around the globe, something which really no one else does, and which accounts for a major reason why we pay so much more than everyone else. Other countries are much more concerned with their immediate little bubble around their nation, while the US is concerned with guarding the whole world. Because, frankly, no one else is gonna do it. And making sure that sea lanes stay open and free is of fairly critical importance to our non-military interests. It’s one of the major enablers of global trade, which drives massive economic growth not only in the US but everywhere else. And it honestly does not just happen by magic. If you removed the US Navy from the equation, things would not stay as they are. You’d see a major destabilization of shipping traffic, which would result in significant economic impacts across the entire economy.
Beyond that though, we also need to remember that the US Defense industry ends up funding a huge amount of technology that eventually results in dramatic improvements to the average person’s life. Defense spending created the internet, enabling the entire modern economy which depends upon it today. It created GPS and the shift in how we get around that came with it. Research groups like DARPA have consistently pushed the envelope and funded advanced research that improves our lives, and the Small Business Innovative Research (SBIR) program provides a great incubator for emerging small businesses in our economy.
So, it’s just something that needs to be taken into account when talking about Defense spending. It’s not all bombs and death.
Certainly, that’s not to say that protracted wars that we don’t need to fight aren’t a massive waste of our resources, and should be avoided when at all possible.
BUT. You don’t get just fiscal restraint with Republicans (you can argue you never get that anyway, but I digress.)
You also get religious dogma, anti-science and corporate cronyism right along with it (although the later certainly isn’t limited to just the GOP.)
I don’t think you have to though. Moderate republicans like Kasich, or Huntsman before him, do not seem to be anti-science. There is nothing about conservatism which DEMANDS a rejection of science. It’s merely that those groups have become overly vocal on the right.
But that’s why it’s important to support moderate conservatives, who aren’t absurdly dogmatic on such issues. Because those extreme views are damaging, and get in the way of real, rational conservatism.
