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Old 06-14-2006, 01:26 AM   #2 (permalink)
smooth
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Location: Right here
I was going to dig through all the past posts about attributing macro-economic developments to particular administrations and specific actions...such as, whether the current tax cuts can really be noted as a causal factor in what you are citing above--but it's not particularly necessary to answer your questions at the end.

Primarily, two things are going on currrently: increased revenue and reduction in the deficit. But these two things are not necessarily connected, although they appear to be on the face of it.

Aside from the issue of how far back governmental action stimulates tax revenue (whether recent supply side policies did it, whether Clinton's policies did it, whether Bush former's policies did it, or if we should go all the way back to Reagan OR notwithstanding that the president has very little to do with the larger economic picture, in general, all of which have been claimed by one side of the aisle or another), this does not indicate whether such action is the cause of increased revenue or whether increasing collection tactics resulted in them.

That is, are tax revenues up because more money is flowing or because the IRS is doing a better job of netting it in. We don't know from the factoids presented in your piece.

Allowing that more money flowing is the cause, or significant factor, that says less about how the deficit is declining without producing hardships for middle/lower classes without looking at a broader picture...

For example, tuitions are sky high and increasing rapidly. Currently, the legislative bodies are marinading over a bill that would lock students into paying a relatively high loan rate. Whereas I locked much of my loans into an historically low rate of 3.5% through a consolidation process, this new bill would lock my current graduate student loans into a %8+ rate. That's not significant, it's massive. One could argue that it's crippling, especially when we consider who takes loans out for school--disproportionately the impoverished classes.

When the feds strip or reduce funding for schools, those with the least amount of money are hit the hardest, regardless of their desire to do right by themselves and become educated and give back to the societies they live within.

Next, we move on to services rendered. When the feds tighten their purse strings, the states and localities must a) pick up the slack by taxing their people more and/or b) reducing services. When we look at a place like California, that has a wide variety of social services funded via taxation, the immediate effect was to raise local and state taxes. The long-term effect has been to systematically strip/reduce funding from "non-essential" agencies and services as well as figure out ways to reduce funding even to the essential ones.

In the case of a place like Oregon, that doesn't have a variety of tax structures, particular things like property tax and for-use fees are raised. Things that some people don't care about, like camp site fees or hunting licenses, are raised along with more visible services--like firefighting, police, and DMV fees. These kinds of changes disproportionately affect classes of people who have relatively low levels of power, such as, elderly home owners, destitute "campers", and low-income people who rely on the police the most (who feel both the economic crunch of demand for more dollars and the policy implications of less patrols in the very areas that need them the most). And since schools depend on federal dollars and local funds, when the federal dollars go away a more wealthy community can afford to pick up that slack in a way that an impoverished community cannot.

One response has been that a number of services I've listed are not fundamental rights, nor obligations for a society to provide for its citizens. Whether one thinks another person has an ethical/moral/legal right to affordable housing or effective policiing is a subjective argument, not objective. It's based on ideological responses, much as my argument laid about above that such services may in fact be "essential" to one group and not another is ideological.

Cumulatively, however, these things present a serious problem for our society. While appearing to "save" money, reams of scientific evidence (empirical research, hard cold facts) indicate that the money we save on the front-end is pennies on the dollar to the money we spend at the back-end in the form of incarceration and crime within impoverished communities perpetrated by those who attended shoddy schools and are presented with bleak prospects in their futures.

This part of my argument is not subjective. The money we save now will have to paid in one form or another. The most prominent supply-side economic proponents don't take issue with my rendition of how this process can play out. That is, they recognize that some people are in yachts, some in boats, some in rubber rafts, and others in inner-tubes. Yet, their response is the entire tide is rising, so everyone benefits as a net result.
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