“Read My Lips, No New Taxes”
It’s been almost a quarter century since we heard that iconic bit of campaign speech. Iconic because those words helped cost President George Bush (no ‘W’) the 1992 election. Those same words probably actually helped him win the 1988 elections. It turned out to be a campaign promise he couldn’t keep.
Occasionally a supporter will try to nit-pick and say that Bush promised there wouldn’t be any ‘New’ taxes, but didn’t say he wouldn’t raise existing taxes. This view blatantly ignores the words of the sentence uttered immediately prior to the one including the above quote. That sentence was, “And the Congress will push me to raise taxes and I’ll say no.”
I’ve already discussed the concepts of Starve the Beast and why the politicians are not really working to compromise on the budget in earlier blog posts. I love that the Zakour and Roberts, the authors of the comic “Working Daze” managed to sum up the impasse in a split- panel, usually non-political(lightly political), comic.
The bottom line is that some politicians really do want to believe in a world where we can trim the federal budget to fit our federal income. The key words in that sentence are “want to”. Only a fool can look at the current fiscal situation and envision a single pronged attack on the deficit could succeed.
Truly defeating the beast that is the national debt will take mutually supported assaults, a three-pronged attack. We need to reduce spending, certainly. There is always fat to be trimmed when government is involved. We also need to increase income and the other two prongs of the battle plan would cover that. Raising taxes is part of that, it doesn’t need to be a permanent or huge part, but it’s certainly the fastest way to increase income. The last prong, which also increases income, is the hardest. It involves growing the economy.
Some will tell us that increasing taxes will hinder economic growth. This is a flat-out truth only if we taxed every penny of income. We don’t. In personal taxes we have all kinds of deductions. Business taxes are much the same. The costs of business are, in most cases, deductible. Profit and Capital Gain are where taxes hit hardest. Profit is money that businesses do not spend. This means it contributes little to economic growth. In an ideal world, some is saved for a rainy day and most of it gets divvied up to the stockholders. In the real world, the people with the largest shares of stock award themselves large bonuses, dole out a tiny share to the stockholders and actually do save a little for the business.
So while there is truth that higher taxes do, technically, remove money from the economy, that particular pool of money is going to people who don’t reinsert all their money into the economy. It seems unfair to target people just because they have more money, but increasing taxes on the swath of the population that is already reinserting all their income back into the economy is trying to squeeze blood from stones.
Okay, when an economy is as bad as ours, we should all be willing to take on a little bit more of the burden. President Bush, in reneging on his promise, tried to spread an increased tax burden across the board. That wasn’t the tax increase that eventually passed, but in the end he had to raise taxes – in the middle of a recession. It wasn’t popular, but it was necessary. Without that iconic quote to hold against him, President George Bush might have maintained more of his popularity. It might have been him that reigned in the budget to where it was at the end of the 20th century – with projected surpluses. Those surpluses quickly disappeared during his son’s terms in office, due to circumstances that had little to do with politics. A revival of ‘Starve the Beast’ economics after those circumstances has led us to where we are now.
There are over 500 people right now with direct input on how to handle the impending need to raise our spending limit. Only one has the onus to make the proper and responsible decision. The others can stand on pulpit and espouse dogma, and spin the ultimate outcome to their favor. Those others won’t have supported the necessary taxes we’ll eventually need to fix our deficit. Those others won’t be decidedly and identifiably directly responsible if no agreement is reached and the government goes into default. Only one person will be held directly and indubitably responsible for the outcome.
Twenty one years ago that person was President George Bush. He made the responsible decision. Despite his earlier conviction, he faced reality head-on and accepted it. The thing is that every single one of those 500-plus people would do the same thing now if they were in that one position. They’d do it because it’s the right and responsible decision. Sure, the most conservative of them would fight tooth and nail to prevent tax increases, but, in the end, they’d compromise. They’d compromise because the more important issue is preventing the impending default and they, if they were in the position to take responsibility, wouldn’t want to be responsible for that. Every single one of those 500-plus individuals, should accept that, while the focus will be on that one position, each of them, as individuals, shares the responsibility and should step up to face it.