Posts Tagged ‘deficit’

In Pursuit of the Great White Whale

December 3, 2012

As explained in my recent post, the best way to raise tax revenues, mainly from the rich, is to cap deductions, avoiding the politically charged issue of raising tax rates. Republicans seem open to this. But President Obama and the Democrats are not; instead, they seem Unknownpositively obsessed with raising tax rates. It’s no longer just about revenues, or even merely making the rich pay more; it’s a line in the sand for a top tax rate restored to 39.6%, and not a tittle less. They pursue this as some kind of vendetta, as Ahab pursued his great white whale.

Both sides are blameworthy, pushing narrow partisan interests while convinced of rectitude. But the Democrats now outstrip the GOP in zealotry, in their evident sangfroid approaching the fiscal cliff. They even seem to think going over would be good for them. Here’s why: in the first place, they figure they can pin the blame on Republicans. And secondly they see this as a white whale trap (this is the Patty Murray plan; she’s an extreme liberal Senator from Washington). If nothing is done, all the Bush tax cuts will expire on January 1. Republicans wouldn’t have the votes to restore them for the rich, while Democrats would bring forward legislation to re-reduce tax rates for the non-rich, and defy Republicans to oppose that. Gotcha!

images-1And because they thusly think they have the upper hand, Democrats aren’t being serious at all about spending cuts, even reducing what they’d previously offered Republicans in trade for higher taxes. The cuts on offer now are paltry, and mostly smoke-and-mirrors besides. No wonder Republicans balk. Democrats want them to: it’s “Make my day.”

They feel cocky and empowered because they won the election – “decisively.” How often do we hear that? But a 50-48% win is not what I call “decisive.” The electoral vote was more lopsided, but only because a passel of swing states went by the narrowest of margins. And though they gained a few seats, Democrats failed to capture the House of Representatives. The fact is that the country remains closely divided; the election changed nothing, settled nothing.

The conventional wisdom seems to be that going over the cliff briefly is not catastrophic, because then the parties will scramble up a deal. I’m not so complacent.

Firstly, the mere fact of Washington actually letting this happen would be terrible for the economy, eroding confidence in our political system even more than it was already eroded by the partisan games of the last few years. Remember that the fiscal cliff was created intentionally, to force the parties to compromise. And if they can’t compromise when up against such a deadline, why expect a deal without one? Once over the cliff, a kind of virginity will be lost. If the sky does not fall straight away – but only in slow motion – there will be even less impetus for a “grand bargain.” Furthermore, Democrats will now have actually bagged their white whale – tax rates will rise for the rich – thus leaving no bargaining chips for getting anything done on spending. So nothing substantive will get done.

bigstock_sinking_ship_in_the_sea_187677741-300x225America is the Pequod. The Democrats will party on deck while the vessel takes on water below.

Call me Ishmael.

How Romney can win the debate (and election)

October 2, 2012

I chuckled when Jonathan Haidt, in his recent book, said he’d been a 2004 campaign speechwriter for John Kerry – in his head, frustrated at Kerry’s failure to say what he (Haidt) thought necessary. Well, I’ve been speechwriting like that for Romney (posted here on 3/1 and 8/19). And now David Brooks, in his latest column, has given it a shot too, for Romney’s opening statement in the debate.

I’ve taken Brooks’s draft and reworked it:

Till now I’ve let myself be packaged as an ideological candidate. But, to be honest, that’s not really me. I see myself instead as a pragmatist problem-solver. So as the election nears, I’ve decided to leave aside political game-playing and get real.

My friends, America’s going broke. The next president had darn better finally make a “grand bargain” with the other party to get the budget under control. Mr. Obama has tried to (well, sort of), over the past four years, but failed. There’s no reason to think he’ll succeed in the next four.

One factor is that, while in 2008 he promised to be post-partisan, he actually shut out Republicans from Day One, making bipartisanship impossible.

Now, Republicans do share part of the blame, by refusing to consider any tax increases. And we should certainly aim to tax as little as possible. But there’s no way we can deal with our debt crisis through spending cuts alone; and no way Democrats will agree to major spending cuts unless Republicans budge on taxes. Other countries facing similar problems have successfully overcome them by raising something like $1 in new revenue for every $3 in spending cuts.

That’s a basically reasonable way forward. The only possible way. President Obama will never be able to achieve it; he’ll never get Republicans to accept it. But I can – and I will.

Make no mistake, we have to do this. We can’t keep spending a trillion a year more than we take in; and if nothing is done, it will only get worse, as the ratio of taxpaying working people to retired and benefit-receiving people inevitably shrinks. In fact, we’re able to borrow a trillion a year for now only because interest rates are at historic lows. But as our debt balloons, and repayment grows doubtful, countries like China won’t keep lending us money at such low interest rates. And when interest costs on our debt ($16 trillion and counting) jump up to more normal levels, we’ll be in deep doo-doo. We won’t be able to afford any of those benefit programs Democrats keep vowing to protect. Our government will be bankrupt and our economy destroyed.

This is the biggest problem facing America. Tackling it will take some spending cuts and tax increases none of us will like. President Obama and the Democrats are frankly incapable of dealing with it. They don’t even want to hear about it.

And by the way, the president’s proposals for higher taxes on the rich are not an answer. They’d be a drop in the bucket. I would also like to make clear that, contrary to what they tell you, I am not – repeat, not – proposing to reduce the taxes rich people pay.

But what would also help our debt problem is better economic growth, getting more Americans working. Democrats seem to think government can create jobs. They never seem to understand that most people work for businesses, so for high employment you need businesses to be successful, competitive and, yes, profitable. But according to the World Economic Forum, American competitiveness has fallen in each of the last four years.

Well, what do you expect with an administration that basically sees business as a public enemy? A Romney administration will instead aim to help businesses to be more competitive and successful, because that’s how you get more jobs – and less deficit spending.

President Obama has no plan for the next four years except to continue fighting the same fruitless battles he’s failed to win over the last four. If you think that’s a good plan for our economic future – then vote for him.