Trouble Ahead, Trouble Behind

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Don't run with scissors, and never try to 
teach a pig to sing

Once again, in what seems an almost annual game of political chicken, the extended Bush Tax Cuts are due to expire at the end of the year.  This time, however, it appears that the Obama administration will dig in its heels and actually refuse to agree to an extension of the cuts on marginal incomes over $250,000.  This is, of course, political in the sense that it forces Republicans into making a hard choice between holding middle class taxpayers hostage to reduce rates for the tremendously wealthy, and backing down and giving the President a clear-cut victory going into November. But it is also good policy, in that it would allow the government to increase revenues without resorting to unreasonable austerity measures.

An election year has a tendency to focus one's thoughts, and despite some expected weak knees in the Democratic caucus, the President can be expected to hold firm on this position, even to the point of vetoing any legislation that includes tax cut extensions for the 1%. So, based upon these assumptions, it's pretty clear that after all the Sturm und Drang of the political argument, and, of course, assuming the Republicans don't just win the election and pass even deeper cuts for the richest Americans, all the '91 and '93 tax cuts will expire and we will return to the horrific dystopian socialist redistributionist taxation policy of the Clinton administration. This will virtually eliminate the annual budget deficit, and allow the conversation around fiscal policy to return to matters of macroeconomics and unemployment rates. But in thinking about how this conversation might play out politically, it occurred to me that we've only been looking at half the equation - that is, in our obsessive focus on budget deficits and spending levels, we've somewhat lost track of the whole point of government revenues.

If taxation rates increase and we suddenly find our spending and revenues in general alignment, the assumption is that we can a.) stop demanding cuts to critical programs like Social Security, Medicare, Medicaid and Unemployment Insurance and b.) go back to making important investments in key areas such as financial support for the states, infrastructure renewal and education. But here's the thing: The budgetary conditions will have changed, but the legislative status quo will have, if anything, hardened. And if Congress won't appropriate those funds, they will sit in the Treasury unused. So when you think about it, the Republicans in the House are well-situated to not only nullify the tax increase, they can then tell the hopelessly mis-informed American public that the Obama White House raised their taxes and the economy got WORSE, just as they said it would. Of course, as long as they maintain their majority in the House and and an obstructionist minority in the Senate, they can continue to prevent the President and the Democrats from doing anything to improve the economy, which plays into this nihilistic narrative.

Ultimately, it's simply not enough to raise sufficient revenue to support the government programs the American people demand. There has to be a willingness at the congressional level to put those funds to work to benefit the people, and as long as one of our two national political parties is committed to a primary ideological goal of the upward redistribution of wealth, and our political system is unable to prevent massive obstruction from the minority opposition, there will NEVER be funds available to invest in the future of America and take care of our citizens.
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