Monday, July 11, 2011

The moral answer to the Democrats' pro-tax arguments

The Democrats (and David Brooks) are trying to frame the argument over the debt-ceiling talks as one of those dogmatic Republicans who oppose a tiny raise of taxes on the rich and so are willing to tank the economy over a few mere tax hikes. Of course, this is not what the issue is. We can't get rid of our nation's debt by raising taxes on the rich even if we jacked up the rates to pre-Reagan amounts.

As Arthur C. Brooks report
s, studies of nations that have tried to resolve their own debt crises have demonstrated that the successful countries relied more on spending cuts than on tax increases.
The government can learn from families. In fact, the data show that when countries are trying to find their way out of a debt crisis, the more they rely on tax increases as opposed to spending cuts, the more likely they are to fail. My colleagues Kevin Hassett, Andrew Biggs, and Matt Jensen studied 21 developed countries that have attempted fiscal consolidation over the last 37 years. Some succeeded and returned to economic health; -others failed.
On average, failed attempts to close budget gaps relied 53 percent on tax increases and 47 percent on spending cuts. Successful consolidations averaged 85 percent spending cuts and 15 percent tax increases. Some of the most successful financial comebacks—like Finland’s in the late 1990s—involved more than 100 percent spending cuts, so that taxes could be lowered. The spending cuts by the successful countries centered on entitlements and government personnel.
Even beyond the fact that relying on tax increases would fail to lower, there is a moral argument against the Democrats' plan for wealth redistribution.
For the administration, it’s not about the money—as we have heard again and again, it’s about “fairness.” The president believes that we will be a better nation if we redistribute more money from those who have more to those who have less. How much more do we need to redistribute until our system is fair?

As you ponder this question, remember the facts: The wealthiest 5 percent of Americans already account for 59 percent of federal income taxes. Nearly half of our citizens pay no federal income taxes at all—yet two-thirds of us believe that everybody should at least pay something, even if just to remind ourselves that government isn’t free. The Tax Foundation reports that the percentage of Americans who are net takers from the tax system is nearing 70 percent.

If our system is not yet “fair,” what will make it so? If the top 5 percent paid 75 percent of the total? Or 95 percent? If they could, would it be ideal for the top 1 percent to carry all the rest of us so we could finally have a tax code that is “fair and balanced”?

This is not the America that our Founders believed in—nor a debate they would have conducted. They did not struggle to make America the nation of claimants we are rapidly becoming. They would not have recognized our current leaders’ definition of fairness in terms of forced redistribution. And they would most certainly not have agreed that the answer to rampant government overspending is to tax our citizens more.

To the Founders, fairness was a question of rewarding merit. Thomas Jefferson spoke of the need to guarantee to every citizen “a free exercise of his industry and the fruits acquired by it.” He even wrote to John Adams about their shared belief in “a natural aristocracy among men.” The basis of this hierarchy was not nobleness of birth but “virtue and talents.” Alexander Hamilton praised a community in which “each individual can find his proper element and call into activity the whole vigour of his nature.” And in the following century, Abraham Lincoln declared, “I don’t believe in a law to prevent a man from getting rich” but rather a law that will “allow the humblest man an equal chance to get rich with everybody else.”

Since the time of the Founders, America has not been a magnet for immigrants seeking a system that penalizes success to pay for largesse. Letters from my great-grandparents who came through Ellis Island suggest they were desperate to get to America to earn their success, not to get great government programs like “cash for clunkers.”

In the coming weeks and months, as the debt ceiling debate rages and new budget battles arise, we will hear more and more class-warfare rhetoric about corporate jets, miserly rich people, and the need for higher taxes. Free-enterprise advocates must be ready to make a three-part case. First, it is bad economics to tax our way out of the hole our government has dug for us. Second and more important, it betrays a lack of national moral fiber to say, in effect, “We are too weak to control our spending.” Third and most important of all, it is not “fair” in any traditional American understanding of the word to tax our way out of a spending problem.
These are arguments that need to be made over and over. The two parties have very different vision of the role of government in the economy. We can't win the debate if we don't make the argument. There is no reason to cede the higher ground to their class warfare arguments.

14 comments:

mark said...

Actually, that repubs have threatened to tank the ecomomy over a few tax hikes is precisely the argument.
Saying we can't tax our way out of the deficit is a ridiculous response, as no elected official is making that case. Everyone has already agreed that budget cuts are necessary. The amount of tax dollars to be saved has never stopped repubs from going after NPR (and I have no problem pulling tax dollars from that).
Everything should be on the table, and Obama is right to include medicare and social security, despite getting lambasted by his base. But cutting benefits or raising the retirement age while defending tax breaks for corporate jets and oil and ethanol subsidies is immoral. Repubs are terrified of crossing the teabag party and Grover Norquist.
Obama should be in front of cameras every day blasting the repubs. He's been negligent up until now, but he can make up for it now. Both sides engage in class warfare. So what?

equitus said...

repubs have threatened to tank the ecomomy over a few tax hike

Wrong. It is Obama that is holding the economy hostage to his redistributive tax plans - which themselves would do harm to the economy.

Both sides engage in class warfare. So what?

Wrong. The "protecting the rich" meme is an outright lie. Obama's rhetoric is textbook class warfare. The Republican principle of keeping a lid on taxes is just common sense (to anyone with any economic sense at all).

mark said...

Defending some of these tax policies reminds me of the "Zero-Tolerance" rules that lead to schools making idiotic decisions.
Cutting college loan programs, services for veterans, the elderly and children while defending ethanol and oil subsidies is disgraceful. And all because some repubs signed a pledge to never raise taxes. Even from people who called the above-mentioned groups "freeloaders" and "undeserving", this is a new low for you folks.

tfhr said...

mark,

Your talking points default on private jets and oil companies just goes to show that you've not given this any independent thought of your own.

All we heard from the left after Ryan presented his plan was the blatant lie that he was out to kill Medicare. That was absolutely shameful and you should be embarrassed by such dishonesty.

Where's Obama's plan? Why haven't the Dems submitted a budget in more than 18 months? What does Obama want to cut - specifically?

Perhaps when we hear something of substance on the issue then we will be able to judge whether or not Obama is serious about repairing the damage he has done (Stimulus Cash Windfall to Obama Cronies) and whether or not he can find a way to focus on something beyond his reelection goal.

tfhr said...

mark,

You're conflating your own hatred for veterans in that last sentence of yours posted at 18:57. I suggest you try some sort of breathing exercises.

mark said...

tfhr,
Do you realize that there are about 100,000 homeless vets on any given night? They make up a large portion of the entire homeless population.
They are already being hurt by local, state and federal cuts, and the situation will get worse.
I volunteer with an organization that provides help to many poor and homeless. I have delivered food carts to many, including veterans. While it is a private organization, it depends on local, state and (I believe) federal assistance. Local assistance has already been slashed.
Please don't be so glib about the damage the budget cuts will do. I know calling people "undeserving" and "freeloaders" (as was done here without any protest beyond me) makes it easier to justify turning your back on them. Accuse me of hating veterans if it somehow makes you feel better, but think twice about the consequences of what will happen to veterans and others when the budget cuts occur.

tfhr said...

mark,

Don't listen to me about not raising taxes during a recession. I just pay taxes - what would I know about their effect on my purchasing power or my ability to invest in other people's businesses?

Here is a true economic expert's advice on raising taxes during times like these:

http://www.youtube.com/watch?v=8glbYVk3WSo&feature=player_embedded

Where is he wrong?

mark said...

tfhr,
Nobody is talking about tax increases going into effect now, but rather in 2013.
You are either lying or ignorant of the debate. Possibly both.

tfhr said...

mark,

Please see my comment in one of Tuesday's posts for your rube-like wonderment about tax increases hitting the street AFTER Obama's one concern: The 2012 Election.

By the way, what did you think of Wunderkind Obama's 2009 pronouncement about NOT raising taxes? He thought it was a bad idea but now it's just great - kind of like his earlier missive against raising the debt limit. Raising the debt limit would be "bad leadership", he said when he merely coveted the office.

Here are his 2006 words exactly:

"Increasing America’s debt weakens us domestically and internationally. Leadership means that 'the buck stops here.' Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt problem and a failure of leadership. Americans deserve better."
http://www.nationalreview.com/corner/256288/senator-barack-obama-explaining-his-2006-vote-against-raising-debt-limit-andrew-c-mcca

Have the years somehow robbed him of the clarity he once seemed to possess or will he simply just say whatever he thinks he as to say to get by?

tfhr said...

mark,

First of all: Thank you for your efforts to help homeless veterans.

I'm glad you bring up their plight as they are often the most deserving of anyone that we can and should be helping. But I want to ask you how much of Obama's massive CASH GIVEAWAY - The Stimulus Bill - was dedicated to caring for veterans and why veterans were not the most heavily funded recipient of all the "Stimulus" cash? I mean you bring them up first so why didn't Obama when it came to "spreading the wealth"?

mark said...

I don't know how much was dedicated to veterans, but I do know someone here called the recipients of stimulus money "undeserving", and that group of recipients included veterans. If you're so well-versed in veteran issues, why didn't you call out that person yourself?
I can afford to pay a bit more in taxes, and I can deal with my retirement age going up. But I think certain groups should be protected from cuts if at all possible: Children, mentally and physically handicapped, etc. I would certainly include veterans, especially those who have suffered injury or mental problems from their service.
In the end, dems and repubs will make cuts that are, in my opinion, immoral. I would at least like to see us cut some tax loopholes, subsidies and programs (NPR, NEA to name two pets of dems). And yes, I'd like to see tax rates on millionaires go up.

As for Obama in 2006: Simple, he was playing politics. The vote wasn't in question. Now it is. You do realize that all politicians play politics, don't you? Play time is over.

tfhr said...

A change in retirement age is fine with me - I don't expect to see a dime of my Social Security anyway.

I pay nearly 40% of my income to the US Treasury and Maryland. I'm not a millionaire, mark. I'm not including sales taxes either. We work roughly half the year to pay our taxes before we can attempt to put away money for our futures, put food on the table and repair that roof over our heads. Just today I learned that the National Institute for Allergies and Infectious Diseases has been sending out cash in envelopes to entice people to respond to a survey. So far they've wasted over $1,000,000 doing that and there is a fair estimate that much of that money went straight into trash cans as recipients discarded the survey envelopes as junk mail. Human Health and Services Secretary Sebelius was unaware of the program.

When a politician shamelessly engages in hypocrisy as you pointed out with Obama, you should not excuse it as you did. We need accountability. We need across the board reductions in every federal office budget to force accountability and we need to stop finding "hostages" to threaten - Vets, old folks, teachers, etc., any time a sacred cow is threatened because that is what always happens.

You did it yourself with the reference to Vets on the street. It's a time worn tactic to scare the old folks and to wail about veterans when the budget comes under threat but there are millions of useless government expenditures that amount to billions of dollars of waste EVERY day. Obama can cover Vets and Social Security for grandma with current rates of revenue if he wants to but he prefers to resort to scare tactics. What a scum bag.

Your repeated remarks here - without citation, as is usual - that some unnamed entity has called someone "undeserving" is getting old. Your shotgun blast at the rest of the readership for not satisfying your sense of indignation with some sort of condemnation is just so much self-righteous preening that it takes my breath away. Stay focused on the topic - salvaging the economy from Obama's mismanagement - and stop with your useless posing.

mark said...

tfhr,
Another fun rant. Thanks for entertaining me.
My comment about vets wasn't about the debt limit fight. They were about cuts that you and others would like to make in programs that assist "undeserving" groups.
I will keep using the "undeserved" comment because the person who made it - skay/suek - never retracted or apologized for it. In fact, she lied and said she didn't "recall" making it. Ironically, you keep bringing up my stupid "fish" joke though I immediately apologized and regretted it. That you still bring it up says more about you. But you come here because you can spin your lies and tales and idiotic comments and nobody here (except me) will call you on it. It's not just me who knows your a fraud. But I'm the only one who will call you out.

tfhr said...

mark,

It's a good thing we've got you to save us all from my "fraud". Do you wear a cape when you're fighting crime or do you just use it to wipe the Cheeto dust off of your grubby fingers?

When was the last time skay/suek posted here? Sounds like you've been hanging onto that fantasy for quite a while. Even more disgusting is your unceasing effort to tar everyone else because of something you're laying on a third person. I remember when Biddle was cracking jokes about raping children here - you didn't offer a word of disapproval. Should I draw a conclusion about you from your "silence"? That crappy knife of yours cuts both ways, mark.

And next time, don't bring up Vets and old folks for use as hostages when you know full well they're used for that purpose by unscrupulous politicians to protect other tax dollar giveaways. Really mark, if Obama was so concerned about those two groups he would say right now that he'll protect them no matter what and he'd even cut precious cash infusions to "green" industry in order to do so. Not going to happen. A real leader would address Vets and seniors to assure them but if he did that he wouldn't be able to use them for 2012. Only the people and interests that pay up get pay back when you can just scare the others to vote for you. Look who got the priority for Obama's "Stimulus" boondoggle if you actually wonder where seniors and Vets rank.