Hey, guess what, they ARE for raising taxes

By Clifford F. Thies

During the election of 2008, I actually listened to Obama’s stump speech. Like a taxi cab driver, I put the meter down when he started talking and ran a running total of the cost of his promises. Free or reduced cost medical care, help with college tuition, affordable housing, new initiatives in Africa and elsewhere, climate change, on and on and on, 1 trillion dollars, 2 trillion dollars, 3 trillions dollars, etc. and etc., all to be paid for with a small increase in taxes on "the rich,” even while most people would be getting “a middle-class tax cut.”

The numbers never added up.

Now, in the face of the country’s second year of trillion dollar deficits, the Democrats are talking tax increases, starting with the expiration of the Bush tax cuts, as well as every other tax break with an expiration date, higher income and payroll taxes, higher taxes on business (that will merely get built into the prices of the goods and services they sell), increased fees, and – the really big one – a national sales tax of something like 20 percent.

It’s not that Democrats “want” to raise taxes. It’s that the deficits are “unsustainable.” And, besides, it’s all Bush’s fault. The deficits, the bailouts, the cost of the wars in Afghanistan and Iraq, the whole financial mess, it all began under Bush.

During the first seven years of the Bush administration, the ratio of debt-to-GDP remained constant. The addition to the debt was, thus, sustainable forever. To be sure, this is a retreat line from the traditional definition of a balanced budget, but it is a valid concept.

The budget would have met the traditional definition if not for the wars in Afganistan and Iraq. In real time, I supported the former and opposed the latter. But, what are Democrats raying? That 9-11 was Bush’s fault?

Because such things happen, fiscal policy should be calibrated so that, over the long haul, taking war years and peace years into account (as well as taking recession years and recovery years into account), there should be no upward trend of the ratio of debt-to-GDP.

Socialist policies delay Recovery; You'd think we would have learned that from FDR's Time

With regard to deficits associated with the crash of 2008 and following, some degree of deficit spending during a recession is good, in accordance with the principle I just expressed. The way the federal budget operates, tax revenues constitute an enormous “automatic stablizer.” During recessions, tax collections fall much more than GDP, and during recovery, they increase much more. Unemployment benefits are another automatic stabilizer. Payments increase during recessions and collections increase during recoveries.

BUT ... where is the recovery? Socialist policies forestall recovery. Indeed, raising taxes from already high levels make deficits worse because of what are called supply-side effects.

The ginormous stimulus packages and several extensions of unemployment insurance have thrown fiscal policy completely out of whack. While saying this started under Bush (as though the Congress was not Demoncratic at the time) may serve some partisan purpose. But, I am unconstrained by partisanship. Socialism under Herbert Hoover was bad, as well as under FDR. And, socialism under Bush was bad, as well as under Obama.

With regard to the even more ginormous but hidden debt implicit in our entitlement programs, I thought we had agreed not to concern ourselves about that? The time to have done something was under Clinton. And, we did something. Clinton appointed a commission, and it produced three minority reports, one for complete privatization (a la Chile), another for a government-managed private investment board (a la Singapore), and a third for funding the investment board only with U.S. Treasury securities, none of which was enacted. Instead, the pathetic U.S. Congress merely approved sending out an annual report detailing how much S.S. participatants "contributed" into the system.

Bush made partial privatation of S.S. a campaign issue in 2000 in order to get my vote, but, you know the old saying, fool me once shame on you. Now, with no viable way to save the U.S. from eventual default on its entitlement programs, there's a certain Janis Joplin-like freedom.

Nobody should care about the deficit. It's just re-arranging the chairs on the deck of the Titanic. And, nobody should agree to a tax increase. It just encourages the bastards.