Originally Posted by Villages Kahuna

Before any of us get our shorts in a knot over what's going on in Washington these days, maybe we should take just a quick look at recent partisan politics here in the good ol' US of A.

According to the Treasury Department, there have been 19 significant federal tax cuts since the end of World War II. Three of them were passed under the administration of George W. Bush, the Economic Growth and Tax Reform Reconciliation Act of 2001 (EGTRRA), the Job Creation and Workers Assistance Act of 2002 (JCWA), and The Jobs and Growth Tax Relief and Reconciliation Act of 2003 (JGTRRA). The total "Bush tax cuts" were dramatically greater than either the Kennedy tax cuts in 1964 or the Reagan tax cuts in 1981. The amount of the Kennedy and Reagan tax cuts totaled $123.6 billion per year (in constant 2003 dollars) compared to the $188.1 billion per year for the three Bush tax cuts combined. So, the ten-year effect of the Bush 43 tax cuts was a reduction of federal revenue in the amount of $1.88 trillion dollars.

It doesn't take an advanced degree in accounting to note that either reduced tax revenues or increased federal spending or a combination of the two will produce annual deficits and increases in the national debt. Interestingly, the three Bush tax cuts were subjects of heated partisan controversy in Congress and were finally passed by the Republican majority at the time using "reconciliation rules" in the Senate to get the three cuts enacted.

So let's fast forward to 2010. The Republicans, now in the Congressional minority, are loudly bemoaning the fact that the Democrats intend to use the same reconciliation rules to pass the President's healthcare reform legislation. The Congressional Budget Office has not yet "scored" the legislation which will be introduced by President Obama within the next couple of days. But the amount of "$1 trillion" has been bandied about by the Republicans as the ten-year cost which is "unaffordable and unsustainable". There may be some changes in the items to be reconciled between the House and Senate, but the Senate bill was scored by the CBO to have a ten-year cost of $871 billion.

So if we calmly consider what our partisan politicians in Washington have done and are complaining about, the Bush tax cuts arguably added $1.88 trillion dollars to the national debt over ten years (even after the benefit from increased economic growth resulting from the tax cuts). If the healthcare reform bill is passed using reconciliation, it looks like it will add about $1 trillion to the national debt, almost double the amount resulting from the tax cuts achieved by the Republicans using the reconciliation process in the Senate about a decade ago.

But the Democrats have not taken action to renew the Bush tax cuts, so the revenue from those increased taxes will not only pay for the healthcare reform bill being "reconciled", but probably reduce annual deficits and the national debt by a few hundred billion per year as well.

There's no sense getting into a deep discussion of other egregiously expensive programs embarked upon by Congress in the last decade of so, but I suppose we could add in the Medicare Prescription Drug, Improvement, and Modernization Act of 2003. That bill was written by the lobbyists for the drug companies and was passed in the dark of the night by the majority party at the time with a margin of one vote. At the time the cost estimates for the bill, which was the largest overhaul of Medicare in it's history, was an amount in the neighborhood of $400 billion over ten years. Now, seven years into the program, current estimates are that the prescription drug bill will actually add over $1 trillion to federal expenses in it's first ten years.

Tax cuts are popular with politicians. Until the Bush tax cuts were permitted to be reinstated, there had not been an increase in the federal tax rates since 1994, when they stood at very near the lowest level in the history of federal income taxes. Unfortunately, various spending programs are also popular in getting politicians re-elected. And oh how our politicians have spent.

There's been a couple of flip-flops of the political majority over the last couple of decades, with essentially the same results. More spending, weakening revenues, escalating national debt and more intense partisan bickering year after year. But each time it happens, the politicians give the dumb electorate only half the story. They somehow neglect to tell them that they did exactly the same types of things back when they were in power.

As I've said in an earlier post, I've concluded that we'll be joining ancient Greece, the Roman Empire, the Ottoman Empire, Great Britain, and the Soviet Union among others as former world powers. Future historians will be writing, "...how did they screw up such a good thing?" as the analyze the demise of the U.S..

Like I opined in an earlier post, "think Greece" as what the U.S. is going to look like in a generation or so. Maybe we ought to start teaching Mandarin in our schools so we can better understand what the Chinese loan workout department will be telling us how we're going to have to change our way of life in order to repay their loans to us.

Sorry for the negative opinion. Maybe it's because of another cloudy day in The Villages. Someone tell me my conclusions are wrong. Please.