It’s Not Spending, Stupid!!!

Apparently no one seems to understand that spending is what drives an economy. If there is no spending there is no economic activity, no jobs, no personal or corporate income, and no tax revenue. The question is from where does the spending come, the private sector or the public sector. Again, without one, without the other, or without preferrably both, there is no economy. While the right talks about a need to cut "entitlements" and Simpson & Bowles (or should I say Peter Peterson) talk about the future, the problem is yesterday and today. The real need is to cut the entitlements that have gone to corporations and the top 10% of individuals that are in the form of tax expenditures, the various legislative acts that reduce the tax favored people and corporations are obligated to pay for the services they receive from government. Once the playing field is leveled and every individual and corporation is paying the same tax rate based upon that individual's ot corporation's income (including income earned offshore), and the deficit is finally reduced, then it will be time to look at lowering the tax rates. Simpson & Bowles (and Peter Peterson) continue to drink from the same well that produced the poisoned economic theory called "trickle down" that got the country into the present day mess.

Actually, spending has fallen from 25% of GDP to 22% of GDP. Unfortunately, revenue is only 17% of GDP up from 16% of GDP after the Bush tax cuts,wars, and recession. Sequestration, while cutting some spending over the long term will also reduce revenue over the short and long term and the end result will be a larger, not smaller deficit. When employees are furloughed and their pay is reduced by 20%, the amount of withholdings and ultimately the amount of taxes these employees pay is also reduced. When defense spending is cut, the amount of cuts that got towards producing individual and corporate income is reduced so the taxes received are also reduced. What the right fails to realize is the fact that over 20% of every dollar spent by government comes back immediately in the form of local, state, and federal taxes. Cut federal spending by 20% and there will be a 20% reduction of tax receipts forced upon everyone!

The fastest way to increase the deficit is to cut spending.  To do that is stupid!