George W. Bush inherited a strong economy and historic budget surpluses. He left office with historic deficits and the biggest economic catastrophe since the Great Depression. It was a failure of leadership of epic proportions that continues to haunt us today.
President Obama has made some progress in fixing the problems he inherited but more needs to be done - starting with allowing the tax cuts President Bush passed to expire. The Center on Budget and Policy Priorities reports:
Allowing the 2001 and 2003 tax cuts for couples making over $250,000 (and singles over $200,000) to expire on schedule on December 31 represents the best course of action for the budget and the economy. Extending those tax cuts for one or two years, as some have proposed, would be highly ill-advised. It would make it much more likely that Congress would ultimately act to extend the tax cuts indefinitely, increasing deficits and the debt for as far as the eye can see — and thereby adding to the long-term risks that deficits and debt pose to the economy.
Exempting small business income from the scheduled increase in the top tax rates, as some may also propose, would do little for the economy in the short term; only the top 3 percent of people with any business income would benefit. Over the long term, such an exemption would likely harm the economy and the budget by encouraging tax avoidance and reducing revenues.Will Congressional democrats and the White House push for these tax cuts to expire as planned? They better.
Some critics continue to assert that President George W. Bush’s policies bear little responsibility for the deficits the nation faces over the coming decade — that, instead, the new policies of President Barack Obama and the 111th Congress are to blame. Most recently, a Heritage Foundation paper downplayed the role of Bush-era policies (for more on that paper, see p. 4). Nevertheless, the fact remains: Together with the economic downturn, the Bush tax cuts and the wars in Afghanistan and Iraq explain virtually the entire deficit over the next ten years (see Figure 1).
The deficit for fiscal year 2009 was $1.4 trillion and, at nearly 10 percent of Gross Domestic Product (GDP), was the largest deficit relative to the size of the economy since the end of World War II. If current policies are continued without changes, deficits will likely approach those figures in 2010 and remain near $1 trillion a year for the next decade.
The events and policies that have pushed deficits to these high levels in the near term, however, were largely outside the new Administration’s control. If not for the tax cuts enacted during the presidency of George W. Bush that Congress did not pay for, the cost of the wars in Iraq and Afghanistan that were initiated during that period, and the effects of the worst economic slump since the Great Depression (including the cost of steps necessary to combat it), we would not be facing these huge deficits in the near term.
While President Obama inherited a dismal fiscal legacy, that does not diminish his responsibility to propose policies to address our fiscal imbalance and put the weight of his office behind them. Although policymakers should not tighten fiscal policy in the near term while the economy remains fragile, they and the nation at large must come to grips with the nation’s long-term deficit problem. But we should not mistake the causes of our predicament.Click here to read more from CBPP.
Religious leaders from across the United States have spoken out on this issue. The National Council of Churches and others have called for the tax cuts to expire.
From Bread for the World's website you can read "Faith Reflections on Anti-Poverty Tax Policy:
Give generously and be ungrudging when you do so, for on this account the Lord your God will bless you in all your work and in all that you undertake.
Since there will never cease to be some in need on the earth, I therefore command you, "Open your hand to the poor and needy neighbor in your land.” (Deuteronomy 15:10-11)
All of our sacred writings affirm that God consistently expresses concern for the well-being of all people, especially the poor and vulnerable. We believe that God has created a world of sufficiency for all, providing us daily and abundantly with all the necessities of life. All people deserve the opportunity to live lives of dignity and abundance. However, today there are pressing economic challenges facing many throughout this nation, especially those living in poverty, that require our collective attention, effort, and imagination. We raise our voices with and on behalf of those in need to advocate for an economy that serves everyone.
As people of faith, we often talk about the federal budget being a moral document because where we choose to commit our resources demonstrates our values. Our nation’s tax policy functions in much the same way. Paying taxes to enable government to provide for the needs of the common good is an appropriate expression of our stewardship in society. Every year, billions of dollars are generated in tax revenue that are then reinvested in ways that serve the public interest, like providing for our security and building our roads, bridges, and schools.
The tax system also creates financial incentives for individuals to act in ways that are thought to strengthen our social fabric, such as investing and saving for retirement, starting a business, owning a home, getting a college education--even charitable giving. Because of the way tax benefits are structured, however, too often low-wage workers do not earn enough to access those benefits. This results in a system that perpetuates inequality by rewarding behavior that generates financial security for those who already have it, while excluding those who are working hard at low-wage jobs and need help the most. An equitable, moral tax code should reward the efforts of low-income people to work and save at every level.
The undersigned organizations support the following principles to guide the development of tax legislation that will enable families and individuals to provide for their immediate needs, as well as create incentives for saving so that they can build the assets they need to weather future economic shifts, build their human capital and ultimately move out of poverty as well as put our economy on a sustainable, inclusive path.
It should be an objective of national tax policy to:
- Provide adequate income assistance and related services to working families and individuals
- Strengthen and expand programs that support low-income working parents with children
- Provide incentives to pursue and maintain employment and increase earnings
- Strengthen and expand programs that support workers’ efforts to develop their human capital, invest in their financial security, and achieve self-sufficiency
- Be made as simple as practicable so that taxpayers, tax administrators, and legislators can all understand the rules and confidently apply them or comply with them
- Raise adequate revenues to meet societal needs while supporting economic growth and job creation
Bread for the World
Catholic Charities USA
The Episcopal Church
Evangelical Lutheran Church in America
Friends Committee on National Legislation
Islamic Relief USA
Jewish Council for Public Affairs
National Council of Churches of Christ, USA
National Council of Jewish Women
National Ministries, American Baptist Churches USA
NETWORK: A National Catholic Social Justice Lobby
Presbyterian Church (U.S.A.) Washington Office
Union for Reform Judaism
The United Methodist Church – General Board of Church and Society