While I applaud my opponent's pragmatic, economic approach, I do disagree with his underlying assumptions. Repealing these tax cuts will have detrimental consequences for our economy both in the immediate and long-term. My previous analysis discussed the consequences to our long-run economic prospects, and to that I'd like to add the necessity of addressing entitlement spending such as Medicare and Social Security that easily eat up a significant portion of our annual budget without stimulating our economy. Rather than kicking the can down the road and utilizing a short-term Band-Aid fix, politicians on both sides of the aisle should come together to address these central problems so that contractionary fiscal policies such as tax hikes will not be necessary in future years.
Should we adjust our scope to the near term, we will see that the economic analysis provided by my opponent simply does not stand reason. Read any finance, business or economics-oriented newspaper, and you will hear incessant fretting over the aptly named "fiscal cliff," a significant part of which consists of increased belt-tightening from repeal of the Bush tax cuts. While placing the tax burden on the wealthy may reduce their consumption to a comparatively lesser degree, our economic system is based also on a complicated yet sophisticated financial industry largely based on confidence. When investors get worried or uncertain, we see an immediate contraction of the economy. This decreases household wealth, causing consumption to fall, and job growth (which in fact is overwhelmingly dependent on huge companies, not small business owners) to come to a halt. Allowing the Bush tax cuts to expire will have exactly this effect on our economy.
Perhaps these consequences would be acceptable if it could solve our fiscal problems - but in reality the revenue from repealing these tax cuts would cover only a small part of our deficit. The only real option to fix these structural problems is to scale back government spending. This may require rolling over our debt another year as we implement these difficult cuts, but unfortunately, it is the only viable way to fix the accumulating debt with which my opponent is so (justifiably) concerned.
