Bush, of course, is out at every opportunity warning Americans that the Democrats will raise their taxes - an assertion that resonates with people who only listen to soundbites but don't take the time to examine what the Bush administration's taxation policies have really been about.
Mr. Bush set the trap in 2001 — and in 2003, 2004 and 2006. In each of those years, he flogged for new tax cuts without requiring corresponding long-term changes in the existing rules for the alternative tax. It was well known that failure to update the alternative tax would create perverse interactions with the new tax cuts, causing filers’ tax bills to drop because of the cuts, only to shoot back up again from the alternative levy.
Mr. Bush said he would vanquish the problem through tax reform. Didn’t happen. Congress never wrestled with lasting solutions. The truth is, the president and lawmakers are paralyzed. To fix the alternative tax while keeping the Bush tax cuts on the books would result in the loss of some $800 billion in revenue over 10 years, blowing a hole in the federal budget and exposing how utterly unaffordable the tax cuts of the last five years really are.
This past week, the head of the Government Accountability Office also issued strong warnings about how the Republicans current policies will impact the American economy years down the road:
There's a good reason politicians don't like to talk about the nation's long-term fiscal prospects. The subject is short on political theatrics and long on complicated economics, scary graphs and very big numbers. It reveals serious problems and offers no easy solutions. Anybody who wanted to deal with it seriously would have to talk about raising taxes and cutting benefits, nasty nostrums that might doom any candidate who prescribed them.
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Their basic message is this: If the United States government conducts business as usual over the next few decades, a national debt that is already $8.5 trillion could reach $46 trillion or more, adjusted for inflation. That's almost as much as the total net worth of every person in America - Bill Gates, Warren Buffett and those Google guys included.
A hole that big could paralyze the U.S. economy; according to some projections, just the interest payments on a debt that big would be as much as all the taxes the government collects today.
And every year that nothing is done about it, Walker says, the problem grows by $2 trillion to $3 trillion.
The common sense explanations of America's future outlook offered by the GAO are not difficult to understand, even by people whose eyes tend to glaze over when faced with talk of deficits, debt and unfunded liability. The message is clear: America cannot sustain its current economic path.
So, why isn't that reality getting through? Most citizens tend to take a very short view of their nation's economy - comforted by lowered gas prices, lower interest rates and promises of tax cuts. Kevin Phillips, author of the book American Theocracy offers his theory of Armageddon -based economics in a recent interview with CNN's Lou Dobbs:
Phillips is a former Republican strategist and the head of the GAO has no political bone to pick in doing his job as the country's top accountant so they certainly can't be written off as so-called Democratic shills or fearmongers. They're both in agreement about this fundamental reality: America's financial future is in serious jeopardy.
Whether the Democrats have been able to successfully articulate those warnings in their local efforts to regain congressional power is an open question since Bush and the GOP continue to hold up possible Democratic tax increases as the focal point with which to attack the party. What Bush won't tell them, of course, is that if a different approach to the economy is not undertaken soon, the future is indeed grim. But, as Phillips notes, why worry about the future if Armageddon is on the way?
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