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Fiscal Security

squashed:

After seeing bits of McCain’s economic plan, I wanted to introduce a phrase.  Fiscal Security means keeping the national debt low enough and in the right hands that it does not present a threat to national security.  It means making sure that the middle class is healthy enough to make some sacrifices if those are necessary.  It means keeping certain manufacturing jobs domestic so we can produce whatever we need to produce in the worst case.   And it means addressing poverty and dissatisfation at home so that when Al-Qaeda and the U.N. join forces and go all Red Dawn on us they won’t find a lot of domestic allies.  And it means doing all these things in a way we can sustain for generations.

But joking aside, McCain’s proposed tax cuts without corresponding budget cuts aren’t very well thought out.  There certainly was a point, maybe twenty years back, where corporate taxes or capital gains taxes were inhibiting growth.  But we’ve lowered taxes quite a bit since then.  There’s probably a sweet spot where increased revenue from economic growth will match decreased revenue from lowered taxes—but we’re long past that.  Our economy is now more hampered by the out of control deficit (and corresponding inflation and decreasing investment domestically) than it is by federal taxes.

This makes an important point: like a lot of things, tax cuts in response to growth-inhibiting rates was at one point a legitimate policy goal. But we’ve long since reached the point where the gains that resulted from this policy are  gone.