The Bush tax cuts – of so much political sturm-und-drang – are finally set to expire at year-end. The Democrats, after years of railing in high dudgeon over the alleged iniquity of these tax cuts, are now engaged in a legislative effort to . . . extend them.
It looks like they can’t manage to pass anything without some Republican support, and Republicans don’t seem willing to support an extension that doesn’t cover all the tax cuts. My bet is that the Democrats will give in and agree to that, partly because they don’t have the political balls to raise anyone’s taxes right now.
In fairness, the landscape has changed, and in today’s weak economy it would be crazy to raise taxes. That the Dems can recognize this reality is reassuring, somewhat. Yet the real elephant in the room still seems invisible to the political class. Or they act as if it’s not there.
It’s that spending and revenue have gotten way out of whack, and it’s not just temporary. Even ending all Bush’s tax cuts wouldn’t remotely close the gap. And raising taxes high enough to bring deficits down to merely tolerable levels would strangle the economy. So, to paraphrase the anti-war folks, tax is not the answer. Government spending has outstripped what we can reasonably afford.
The problem isn’t only the federal government. Here in New York, with a massive budget deficit this year, and an even bigger hole looming next year, the current budget increases spending by 7%.
We can muddle along like this for a time, but it’s ultimately unsustainable. The day must come when government can’t borrow any more, because repayment will become doubtful, and/or it will have to just print money to pay the debts, destroying the value of the dollar. Oh – and all those guys like Bill McKibben who condemn economic growth? – such growth is our only possible pathway out of this hole.
You actually can’t blame politicians. As long as voters continue to reward pols who promise and deliver more, more, more, that’s what we’ll get. We’re like children with a credit card whose bill is paid by Daddy. Only, actually, it’s the other way ‘round. The bill will be paid by our children.
We’d better have lots of them.