The World Needs More Ninjas

This article (by a co-author of Ben Bernanke, the soon-to-be chairman of the Federal Reserve) looks at an interesting perspective on some of the costs to the wealthy that come as a result of Bush’s tax cuts.

So, although the recent tax cuts have enabled the wealthy to buy more and bigger things, these purchases appear to have had little impact. As the economist Richard Layard has written, “In a poor country, a man proves to his wife that he loves her by giving her a rose, but in a rich country, he must give a dozen roses.”

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For example, deficits have led to cuts in federal financing for basic scientific research, even as the United States’ share of global patents granted continues to decline. Such cuts threaten the very basis of our long-term economic prosperity.

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Large deficits also threaten our public health. Thus, despite the increasing threat from micro-organisms like E. coli 0157, the government inspects beef processing plants at only a quarter the rate it did in the early 1980′s.

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Citing revenue shortfalls, the nation postpones maintenance of its streets and highways, even though doing so means having to spend two to five times as much on repairs in the long run.

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When a pothole destroys a tire and wheel, replacements cost only $63 for a Ford Escort but $1,569 for a Porsche 911.

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Large federal budget deficits and low household savings rates have also forced our government to borrow more than $650 billion each year, primarily from China, Japan and South Korea. These loans must be repaid in full, with interest. The resulting financial burden, plus the risks associated with increased international monetary instability, fall disproportionately on the rich.

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With the economy already at full employment, no one pretends these cuts are needed to stimulate spending. Nor is there any evidence that further cuts would summon outpourings of additional effort and risk taking. Nor, finally, does anyone deny that further cuts would increase the already high costs associated with larger federal budget deficits.