Romney and the Bush tax cut 2.0

The Romney Republican Tax Paradox

            Tax cuts and as little government intervention as possible have been staples in the Republican rhetoric. Romney, presenting himself as yet another modern tax cutting Republican, proposed to cut taxes by 20 % across the board, and pay for those tax cuts by cutting back expenditures, like pbs funding and Big Bird, and last but not least cut back taxes for the middle class without touching the rich.

Logically the government would have less money to spend, on healthcare education etc. unless of course the Romney-Ryan ticket does, what Bush did and borrow money from China, Saudi Arabia and Japan, rising financial credibility, only to rely on the urban myth of the powers of a laissez-faire capitalism, that brought the entire world into this mess. Anti-government rhetoric is en vogue. Although you’d have to ask yourself, why is someone who is so anti-government, running for the highest governmental office? This height of hubris was also fashionable in the 1990s, when the derivatives market began to boom and Central Banker Alan Greenspan tried to do as little as possible to even get an insight into the hidden derivatives market, which in the end turned out to be a ticking time bomb. That bomb exploded in 2008 and when Lehman went belly up, those who previously advocated less governmental interference with Wall Street began to talk about systemic failure, bullying Congress into passing a billion dollar bail-out program for the millionaires who gambled with the savings of the people. Suddenly the government’s pocketbook was quite popular. Rand’s political philosophy of a separation of economy and state did not pan out as those economic cheerleaders believed in the early years of the new millennium. In the end, even Alan “the wizard” Greenspan had to admit at a congressional hearing, you “cannot trust the market”. “I found a flaw in the system”, referring to the liberitarianism of the 1990s.

Unfortunately, should Romney be elected he won’t have the Clinton surpluses to shell out for the “haves and have mores.” Bush’s financial advisor Alan Hubbard than stated: “The only way to control spending is to minimize the taxes”, which is commonly known as the “starving the beast theory”. When a government has no money to function, it has no chance to interfere. Not even three month in office Bush enforced the first major bill – a tax cut of about $ 1.3 trillion. And even with two costly wars gnawing away on the budget increasing deficit spending, Bush promised more tax returns. Romney seems to adopt the Bush philosophy of “this money is not the government’s money, it belongs to the people”. Economists fault Bush for putting politics ahead of economics, fiscal discipline in those days was an alien concept. Consequently one would have to ask, if politics played a huge part in the current crisis, shouldn’t it be those politicians taking responsibility for the cataclysmic recession? With hands-off approach and the government-is-bad-attitude, especially concerning Wall Street, the crisis found fertile soil and people lost their savings, lost their homes, lost their jobs.

Romney, however, does not have the money he so generously promised to return to their rightful owners. So Mr. Romney where does your money come from? In the end, the poor will pay more, the middle class will pay a little less and the rich, well, they might not even have to pay taxes at all. The Tax Policy Centre calculated Romney’s tax cuts would only increase the $ 3,7 trillion hole Bush’s cuts left in the nation’s financial health. Consequently, Romney will have problems raising enough money do finance the tax cut without raising any taxes. Even the great Republican presidential role model Ronald Regan had to scale back his initial tax cuts, when he realized the economy was going down the drain; he pushed through one of the largest tax increases since the depression. Basically, what Romney is trying to do is keeping the leaking boat afloat, while inadvertently adding buckets full of water into the sinking vessel. When President Obama was inaugurated on January 20^th, 2008 he inherited a daunting financial crisis, the financial system was frozen, no credits were available, the unemployment rate was on the rise and the people had lost faith in Washington. Four years ago it was clear that the status quo could not be maintained for long. But today the very same people who shut up Brooksley Born (CFTC), the women who had seen it all coming back in the days of the Clinton administration, are Obama’s financial advisors.

China currently funds the lifestyle many Americans have come to take for granted, raking up debts to buy the American Dream. However, this trillion dollar debt makes the government, whichever administration it would be, the Romney-Ryan Republican version or the Obama-Binden 2.0, dependant on the good faith and the kindness of other countries, namely China, because the EURO-zone has its own mess to clean up and they are piling up the debts pretty heavily, too. Greece had to sell governmental properties to make the budget work, islands, royal palaces, paintings etc., if Romney should become president he could always adopt the Grecian model, move back into his luxurious billion dollar villa and rent out the White House to Wall Street.