Wherever you stand on the Cato Institute’s arguments you can commend them for being big thinkers. They are frustrated by what they see as the paltry size of the cuts being proposed ($61 billion from a deficit of $1,645 billion) and have taken out ads in major newspapers to outline their proposals.
What makes Cato an honest broker is that when it outlines spending cuts, they are real spending cuts and not an ideological wish list.
They propose eliminating federal money for education ($40 billion a year), farm ($20b) and energy ($20b) subsidies, defense ($100b), transportation ($80b), housing ($45b), reducing federal pay ($30b), change Medicare and Medicaid ($100b), quit the drug war ($15b) and change social security($40b by 2020). (I would add Homeland Security to the list).
Contrast that with the house Republicans and their petty-minded, mean-spirited blathering about the NEA or Planned Parenthood or their refusal to discuss defense or try and imagine them proposing to end the war on drugs.
Many economists think that $450 billion in cuts would be disastrous for the long run health of the economy and any conversation about Federal fiscal health that doesn’t include a review of taxes is incomplete. Because if Conservatives do one thing better than ‘spinning’ their cuts, its ‘spinning’ taxes.
Consider that, this week, GE had to defend themselves again, as for the second year in a row they paid no taxes despite earning over $14 billion. (To do this you report your earnings as occurring overseas and take write offs on your financial arm – GE capital.)
Republicans love to complain that at 35%, US corporate tax rate is one of the highest in the world. But what difference does it make if you don’t pay taxes? (In 2010 total corporate taxes collected were $191 billion on corporate profits of $1.7 trillion an effective rate of just over 11%).
The Cato Institute is not an unbiased organization. In its DNA is the belief that things are better if there is less Government, more individual rights and free markets. When you are passionate about a philosophy you can lose your capacity for critical thinking. You can lose sight of the fact that there is no ‘one size fits all’ solution; that perhaps a temporary measure of some other approach might be needed.
I pledge to screw some people to make others happy
But Cato doesn’t say one thing to promote another. Unlike today’s sham conservatives they do not allow a financial crisis to be used as cover for a cultural crusade.
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