Bombing the Moon
How do you increase GDP?
Ezra Klein introduces the use of this phrase, "bomb the moon," in context of Republicans considering increased revenues by increasing taxes. It is funny and it works.
When you have a deficit you have to affect the equation:
Y = R + Q / C + T
Yield (Y), Revenue (R), Quality (Q), Cost (C), Time (T)
Government enterprise is trying to maximize yield. To do that, you need to maximize revenue. The greater pool of revenue is made larger by increasing the Gross Domestic Product. You accomplish that by maximizing incentives for profits to the private sector. Taxation and regulation are disincentives, and that is why Republicans reject them.
The theory is if taxes are held where they are and spending is reduced by government; there will be sufficient revenue for government operations. However, government will have to shrink the amount of services it provides to accommodate revenue decreases.
Democrats are watching the services decrease and believe that service reductions will hurt people in need. Working the spending reduction (Cost) side of the problem alone will not solve the problem.
The question for both Republican and Democrat leadership is how are you going to increase GDP? Without answering that question, all the rest doesn’t matter because the numbers just spiral downward as does government service and value to citizens.
“It is remarkable to watch how Republicans have taken tax increases, which have long been present in deficit-reduction deals and generally considered the equivalent of spending cuts, and turned them into something vastly more extreme and unthinkable. How unthinkable? Here's a little game. Take almost any of the Republican leadership's comments yesterday and substitute the words "bombing the moon" for the mention of taxes. See if the comments don't just work, but in fact work a little better.
"We’ve known from the beginning that bombing the moon would be a poison pill to any debt-reduction proposal,” Senate Minority Leader Mitch McConnell said in a speech on the Senate floor. See? Or: “President Obama needs to decide between his goal of bombing the moon, or a bipartisan plan to address our deficit," said McConnell and Sen. on Kyl in a joint statement. Or: “First of all, bombing the moon is going to destroy jobs," said Speaker John Boehner. "Second, bombing the moon cannot pass the US House of Representatives — it’s not just a bad idea, it doesn’t have the votes and it can’t happen. And third, the American people don’t want us to raise bomb the moon."
"Bombing the moon" would actually make these statements more accurate. A bipartisan deficit-reduction proposal, almost by definition, includes revenue increases. That, along with the spending cuts, is what makes it bipartisan. And unpopular? Tax increases, particularly if targeted at the wealthy, show themselves again and again to be among the most popular ways to reduce the budget deficit. The most recent Washington Post/ABC News poll found that 57 percent of Americans though the best way to reduce the deficit was "a combination" of tax hikes and spending cuts, and polls that have tested specific policies have found vastly more support for raising taxes on the rich than for GOP mainstays like cutting Medicare and Social Security and discretionary funding that goes to programs like education.
Which isn't to say that taxes are good policy. But they're not extreme policy. It's uncontroversial that tax cuts helped get us into this mess. As my colleague Lori Montgomery wrote when analyzing the component parts of our shift from surpluses to deficits, "the biggest culprit, by far, has been an erosion of tax revenue triggered largely by two recessions and multiple rounds of tax cuts. Together, the economy and the tax bills enacted under former president George W. Bush, and to a lesser extent by President Obama, wiped out $6.3 trillion in anticipated revenue." As the Center on Budget and Policy Priorities has shown, letting the Bush tax cuts expire basically stabilizes the debt over the next decade (though it doesn't solve the long-term problem of health-care cost inflation).
This doesn't mean you have to support the full, or even partial, expiration of the Bush tax cuts. Many believe there are better ways to balance the budget, and, for that natter, better ways to raise taxes. But the GOP's sudden insistence that taxes have nothing to do with our problems and only a loon would suggest they have a role in our solutions is ahistorical and unempirical. If you've gotten lost, the first thing to do is try and go back to way you came. After a decade of spending increases and tax cuts, that's what a package of spending cuts and tax increases would do. There's nothing radical about that notion, nothing that should force a halt to discussions and the sort of rhetoric we're hearing from the Republican side. We're not blowing up the moon here.”