Tag: debt limit

Two Proposals to Destroy the Economy

And if that doesn’t work, kill the pensions and what little health care there is

Bryan Zepp Jamieson

January 29^th, 2023

www.zeppscommentaries.online

If you need evidence that the Republican party has been taken over by lunatics, consider this: As part of his deal to get the votes needed to become speaker, Keven McCarthy agreed to let a proposal for a thirty percent national sales tax to sail through committee and get a vote on the House floor.

In most countries, a 30% national sales tax would provoke widespread rioting in the streets, and could possibly lead to a coup or a revolution. Even sales taxes at the state level that are about one fifth or less that big are widely unpopular. For working people and the poor, who have been steadily losing ground ever since Reagan decided to feed the birds by giving all the grain to the horse, it would be a death blow. Groceries that cost $100 a week would now cost $130. Gas would jump between a buck a gallon and $1.50 depending on base price. Just about anything you buy retail other than labor would jump 30% overnight. If you thought 8% inflation was bad, this is dozens of times worse.

Of course, to even be seen as even thinking about such a mad idea is political suicide, but the MAGA and Qanon extremists who hold McCarthy’s leash seems to have convinced themselves that imposing such a tax would take much of the burden off our poor suffering billionaires, and give working people a sense that they were contributing to our society. No, really. That’s what they think. Did I mention the same bill would abolish the IRS outright? Billionaires would only have to pay taxes if they felt like it.

Any second semester economics course will teach that a large spending tax is far more likely to depress an economy than any earning tax. Earning taxes, particularly progressive ones, tax those who can afford to pay the taxes, and in the 50s and 60s, when the top income bracket was 93%, the government cleverly allowed tax breaks for investing back into the economy, such as local manufacturing and retail, and paying employees well. It’s one of the things that made America’s economy the strongest in the world.

Spending taxes (which is what a sales tax is) hits the poorest the hardest. If they can no longer afford food and clothing, they do without. And the billionaires who were hoping the sales tax would cover their new life free of income taxes suddenly find that without sales, there is no sales tax. In short order, they discover a great depression is even more expensive. One reason the New Deal arose in the first place was that unrestrained capitalism and increasing burdens on the working people was what caused the crash, and the New Deal was the only thing that could save capitalism for itself.

Needless to say, Democrats are overjoyed that the Republicans have wrapped this sales tax albatross around their necks. It doesn’t have a prayer of even passing the House: not all Republicans are mad, and the sane ones will vote against it by the dozens. But the self-inflicted damage will be done. The genius who is forcing this vote is Andrew Clyde of Georgia, the same clown called the Sixth of January rioters just regular tourists. He’s both nuts and stupid.

The other proposal the GOP are making is the old tried-and-true gambit of refusing to permit payment of bills already incurred, known as “the debt limit.” This would also crash the economy by wiping out the good credit of the United States, which by itself would cost hundreds of billions of dollars. They want vast spending cuts or they’ll push debt through the roof, which is a bit like saying “fix the crack in my windshield or I’ll drive us at 90mph into a brick wall.” Yeah, that’ll show that old windshield. They won’t admit it, but the Republicans want to decimate Social Security, Medicare, and Obamacare. They’re popular, they help people, and people associate them with Democrats. Therefore they must go.

They also want big military cuts, and since I’ve argued for the same thing for years, I can’t just condemn it out of hand because Republicans are proposing it. But the devil is in the details: WHAT do they want to cut, and WHY do they want to cut it? Remember, several dozen of them happily side with Putin over their own country and are not to be trusted.

At least some of this is driven by Republican desperation. Although the fascist bullhorns of Fox and other propaganda outlets obsess on inflation, the truth is the overall economy has absolutely boomed since Biden became President, breaking records in employment growth, worker income, and small business gains. All those bills he and the Congress passed lit a fire under an economy that was contracting under Trump, and pulled us back from a recession. Because it’s good for Americans, it’s good for Democrats, and therefore Republicans must destroy it.

By the way, this sort of fiscal lunacy isn’t limited to the House MAGAts. Rick Scott, considered a leading GOP contender in ‘24, wants this. Not quite as instant death to the economy as Clyde’s crackpot scheme is, but still plenty bad.

Since Clyde’s deal is dead on arrival, and Biden is likely to call the Republican bluff on the debt ceiling, there may actually still be an economy for Scott to try and destroy as his campaign promises broaden.

Remember, billionaires and big corporations are not your friends. They pretend to like you, but if you get in their way, they’ll cheerfully crush you. And Republicans serve billionaires and big corporations. They are not your friends.