THIS WEEK’S SYNDICATED COLUMN: MAD MONEY

A Broke America Can’t Afford Wars, Tax Cuts

Credit has dried up. The stock market is disintegrating. Unless someone pours money into capital markets, everyone agrees, we could wind up like people in Baghdad, fondly remembering the day five years ago when they pushed the handle and their toilets still flushed. Only one “someone” has enough cash to fix the problem: the U.S. government.

The Bush Administration and Congressional Democrats want taxpayers to pay $700 billion to bail out failing banks. Progressives would prefer to bail out homeowners facing the imminent foreclosure of their homes, as well as those in danger of being foreclosed upon during 2009, at a cost of $1.3 trillion.

Never mind which approach is better. Where will the government find the money?

There are two elephants in the room: war and Bush’s 2001 and 2003 tax cuts. We can’t afford either. Yet, to abuse the animal metaphor, everyone acts like they’re sacred cows.

When you think about it, it’s sheer madness. The city marshal is at the door, brandishing a shotgun, ready to evict you and your family for nonpayment of rent. But while your kids are screaming in terror, you’re at the computer, wasting thousands on online gambling. You could pay off your landlord instead. You could make the marshal go away. All you have to do is stop. But you keep on keeping on. Click, click. More money squandered.

What the hell is wrong with you? What the hell is wrong with us?

In 2007 the non-partisan Congressional Budget Office estimated that the final cost of our biggest national compulsion, the wars against Iraq and Afghanistan, could total $2.4 trillion, or $8,000 per man, woman and child in the country. That’s twice as much as the Korean, Vietnam and Gulf Wars combined. It’s also two-thirds the cost of World War II. Yet no one–not the Republicans, not the Democrats, not the media, not even the left–insists that we get out.

To paraphrase Lloyd Bentsen, I’ve studied World War II. World War II was a worthwhile war, one that freed millions from tyranny and set the stage for the U.S. to dominate he global economy and become the wealthiest nation in history. Iraq and Afghanistan? They’re no World War II. As wars go, they’re not as worthwhile as the invasion of Grenada.

“The CBO estimates assume that 75,000 troops will remain in both countries through 2017, including roughly 50,000 in Iraq,” reported USA Today. If anything, that’s a low-ball estimate. More than a half century after the fighting ceased, we still have 37,000 troops in one tiny country, South Korea. And both McCain and Obama promise to send more troops to Afghanistan. That means more taxpayer money.

Nearly two out of three Americans think invading Iraq–where the lion’s share of war funding is being spent–was a mistake. The Afghan resistance is kicking our butts. Both wars have been a complete, total waste of money, effort and lives. As surely as the sun will rise in the east, we will lose both. At a total cost of at least $2.4 trillion. Ridiculous.

$2.4 trillion is nearly twice the $1.3 trillion it would take to save every home in danger of foreclosure. That would keep many banks afloat, and act as the biggest economic stimulus in history. Can anyone sane tell us why we shouldn’t bring our troops back home? Can anyone justify wasting $2.4 trillion at a time when the U.S. economy is staring into the abyss of total collapse?

The other national obsession is the tax cuts Bush pushed through in 2001 and 2003. “The surplus is not the government’s money,” Bush said at the time, apparently unaware that the economy was already in a recession. “The surplus is the people’s money.” Remember surpluses? Such a Clintonian word. Anyway, Democrats in Congress–still in full-on wuss mode following 9/11–went along with Bush’s tax cuts. But, bless their wimpy little heads, they did manage to extract a concession: In 2011, tax rates would revert to what they’d been in 2001.

Believe a Republican once, shame on you. Believe a Republican twice, what were you thinking? Now so-called conservatives are complaining that “the largest tax increase in history” will occur in 2011 if Bush’s tax cuts are allowed to expire.

Making the Bush tax cuts permanent would codify the most regressive tax change in history. “After-tax income would increase by more than six percent for households in the top one percent of the nation’s income distribution, two percent for households in the middle 60 percent, and only 0.3 percent for households in the bottom 20 percent,” found a Brookings Institution study.

Making the rich richer will cost the Treasury an arm, a leg, and the better part of a torso.

“Combined with a minimal but necessary fix to the government’s Alternative Minimum Tax, making the tax cuts permanent would reduce federal revenues by almost $1.8 trillion over 10 years–and that’s in addition to the $1.7 trillion of revenue losses already locked into law.”

$1.8 trillion. Again, allow me to remind you: $1.3 trillion is the amount we need to stave off imminent financial catastrophe.

That sound you hear is the door breaking down. The marshal is coming down the hall. Get off the computer. Fix the problem. Get out of Iraq and Afghanistan. Let the tax cuts expire.

COPYRIGHT 2008 TED RALL

Advertisements

21 Responses to “”

  1. Anonymous Says:

    $2.4 trillion, or $8,000 per man, woman and child in the country. That’s twice as much as the Korean, Vietnam and Gulf Wars combined. It’s also two-thirds the cost of World War II.

    Come on Ted! Are you adjusting for inflation? You gotta adjust these figures for inflation for this to mean anything…

  2. Anonymous Says:

    Great article! Ted, have you seen the trailers for “An American Carol” yet?? I looks like the right wing/nascar set has got their “Der Ewige Jude” to be remembered by. Have these people voluntered for active duty yet? Just remember, when Michael Moore is wrong, nobody dies. Dorme bene…

  3. The Dead Kennedys Says:

    “The companies tell me that if we don’t get our bomb factories up to full production, the whole economy’s gonna collapse! The Russians are in the same boat.”

    Kinky Sex Makes the World Go ‘Round

  4. Aggie Dude Says:

    Alex: “Connect the dots”
    Contestant: “What is, ‘a game that children master, yet adults fail miserably at’?”

    DING DING DING

    I like your piece, but it doesn’t go far enough. We shouldn’t just scrap the tax cuts, we should double direct taxes on the top 10% of Americans. These people are filthy rich on the backs of the rest of the world (animals and plants alike), and when hard times come, they sit back and craft ways to profit more.

    Second, I think it’s your obligation as a right-minded person, Ted, to not allow the myth that WWII led to a half century of American economic might. That’s patently false, and it allows people to associate victory in the battlefield with economic good times at home.

    That is why McCain’s ranting about victory in Iraq doesn’t get laughed out of the building, because WWII has been associated with the post-war boom. The reality is that The New Deal and a financial reorganization led to said boom. If anything the war completely stunted it. If not for WWII we would have universal healthcare.

    In the absence of solutions to domestic economic problems, this population is dangerously close to seeking solutions through military engagement. We’d probably be on the advance for awhile: The Germans were.

    I am against this bailout completely, and think a financial collapse is a reasonable alternative to patching up the same broken game for a little while longer.

    Remember (angelo!!!) a vote for John McCain is a vote for WWIII.

  5. Ted Rall Says:

    Yes, that’s adjusted for inflation.

  6. Anonymous Says:

    Thanks for clearing up that inflation question. In the future, I’d suggest that you mention that you’re adjusting for inflation when you do it. It makes it easier for your readers to know exactly what comparison is being made!

  7. orvillethird Says:

    And, lest we forget, the tax cuts got us into a deficit in August 2001.

    Further, why stop at withdrawing troops from Iraq and Afghanistan? The Cold War is over. (Or was, before we started baiting the Russian Bear by NATO Expansion and withdrawing from the ABM Treaty…) Let’s get our troops out of Europe. Let’s end NATO. Let’s withdraw from South Korea and Japan too. Even after this, let’s cut military spending. After all, we spend between 1/3 and 1/2 (or more, depending on how you count stuff) of the world’s military expenses. That would likely get us back into surplus territory.

  8. Sean C. Ledig Says:

    I feel like I’m at a revival almost every time I check out one of Ted’s columns. I can’t stop myself from saying a great big AAAAMMMMEEEENNNN!!!! and TESTIFY BROTHER!!!!

    I’ve said for years that I don’t trust any politician who supports tax cuts while we’re facing a multi-trillion-dollar national debt.

    I especially like the foreclosure metaphor. Looking at this country’s financial shape, I’m reminded of when I was staring down the barrel of bankruptcy 14 years ago.

    I avoided bankruptcy by doing two things. First, I cut my own expenses dramatically. Secondly, I aggressively sought new sources of revenue.

    It was not an either/or situation. I had to do both to avoid bankruptcy.

    This country is in the same situation. We need to cut expenses (like the Iraq war, our collection of foreign military bases, etc.) and find new sources of revenue by restoring the top tax brackets to 1979 levels.

    If we don’t, we’re looking at a time when the Great Depression will look like a Sunday School picnic.

  9. Andy Says:

    What we really need is more anti-trust enforcement. Capitalism doesn’t work when companies become too big (or too few) to fail. The result is the same as communism.

    All bailout money should be tied to breaking up the banks and the mega-corporations they loans money too that financed growth and consulidation with loans instead of innovotion.

  10. Incitatus Says:

    Coupla things:

    When Ted writes, “Yet no one–not the Republicans, not the Democrats, not the media, not even the left–insists that we get out.”, he should qualify that saying none of the approved politicians insist on that, cause for sure folks like Ron Paul, Kucinich and Cynthia McKinney do.

    When Ted says that “Progressives would prefer to bail out homeowners facing the imminent foreclosure of their homes”, he and the so-called “progressives” ignore the blatant injustice that this other bailout would be on folks like a couple of friends of mine in California who resisted the frenzy, saved their pennies, and are starting to think about buying a house now.

    Thirdly, there’s certainly a debate over whether WWII was a worthy war:
    – As Aggie pointed out, the USA was already poised to become the dominant economy of the world and the war retarded economic recovery, if anything;
    – Unlike Hollywood “teaches” us nowadays, that war wasn’t fought to save the Jews from the Nazis claws. If it were, it failed miserably. If anything, it was to help save the backs of the British and the Russians, and to put the uppity Japs in their place;
    – Lastly, it may have “freed millions from tyranny”, but it helped enslave just as many millions to similar tyranny, one that lasted a lot longer;

    In the end, all Europeans wars from Napoleon on were a consequence of each other and are a study case in how isn’t good for nothing, except empowering rotten politicians. But I repeat myself.

  11. Laine Says:

    Ted, simply marvelous. One of your best, and most poignant articles to date. Why are we, as a culture, so eager to put on the blinders?

  12. Anders Says:

    Aggie, WWII did lead to the USA becoming the uncontested #1 superpower in the world, at the expense of Germany, Britain, France and the USSR. Unlike some other, slightly more recent wars, where there has been few or no allies to shift the burdens of attrition onto.

  13. Aggie Dude Says:

    Anders, the impact of WWII is certainly debatable, as were our motives for involvement, as Incitatus points out. The larger point I was making was the mythic causal relationship that leads Americans to believe very deep down that victory on the battlefield will lead to prosperity at home. It’s a very dangerous myth to perpetuate, and McCain is one of the most aggressive in doing so. He should not be allowed to become president.

  14. Angelo Says:

    When Ted writes, “Yet no one–not the Republicans, not the Democrats, not the media, not even the left–insists that we get out.”, he should qualify that saying none of the approved politicians insist on that, cause for sure folks like Ron Paul, Kucinich and Cynthia McKinney do.

    he’s talking about the people who matter. Of course there are people like us, but they have absolutely NO SAY and no one listens to them.

  15. Anonymous Says:

    OH NOES!!! The lack of liquidity in collateralized debt obligations will make Saddam’s missing weapons of mass destruction explode.

    Stop falling for the scare tactics. Both the homeowners who bought larger houses than they can afford, and the wallstreeters who made those purchases possible deserve to take a bath.

    The bailout is absolute crap! Taking financial advice from Paulson is like taking medical advice from your tumor.

  16. Aggie Dude Says:

    “Taking financial advice from Paulson is like taking medical advice from your tumor.”

    Best line I’ve seen about this yet!!!!

  17. Matthew Says:

    For the last five hundred years, a succession of top world powers have run through the same process. They use their power to get more and more foreigners to do their work for them, shifting their domestic economies more and more toward service, finance, and other ephemera, and their economies collapse when they learn the hard way that shuffling papers does not generate real wealth.

    It happened to the Spanish, the Dutch, the English, and now the U.S.

    Every time, the narrative is a little different. “It’s a different game now! We have banks, or corporations, or computers! It changes everything!” It changes nothing. It’s just another rationalisation for paperwork as a substitute for making real stuff.

    These are not uncharted waters. The U.S. economy became over financialised like so many before, eventually to the point of collapse. It should surprise no one.

    And the government leaps into action to bail out…

    …the financial sector.

    We are doomed.

  18. Incitatus Says:

    Leave it to the British to explain the crisis in layman’s terms:

    http://www.dailymotion.com/swf/k2GEzYKbv1P6IUHSpY

  19. Ken Says:

    Very funny British segment, except for the little bit about the “unemployed balck man”. When you can’t find anyone else to blame, blame the black guy, right? 🙂

  20. Kurt Says:

    Aggie

    I beg to differ about the top 10% being filthy rich. I am in the top 5% and live paycheck to paycheck and live in a house about 1/2 the size of my father’s, who never made it into the top 10%. Also, my house is in the ghetto. Also, I work my ass off. The cut-off for “filthy rich” is really about the top .5% where people start making in excess of 500k per year. The top 5% only gets you to individual incomes in the 70k range. The top 10% only gets you into $65k range. That is how badly income is skewed in this country. Since we know that there are about 400k people who make in excess of 5 million per year in the U.S. (about .1%) and who pay an average in all taxes of just over 16.5% compared to me at 42.8% after making significant income adjustments, I gotta say, you need to upwardly revise your figure of who is rich. I agree with your premise absolutely. Warren Buffet should pay a bigger PERCENTAGE of his income in taxes than I do, or at least a big of a percentage of his income in taxes that I do.

  21. Incitatus Says:

    Ken,
    I think the “blame” in the sketch is put on the mortgage salesman, not on the unemployed black man in Alabama.
    But I understand how touchy and prickly can be when it comes to that subject.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s


%d bloggers like this: