by John McClaughry
President Obama’s signature on the debt ceiling increase bill impelled the Rutland Herald to publish what amounts to the economic manifesto of modern liberals, socialists, progressives, and Sanderistas. Here are its key points.
Attaching provisions to the debt limit bill purporting to restrain federal spending over the next decade is a victory for “the extreme right wing Tea Party” and its “ideology of austerity.” The bill “gave Republicans the opportunity to persuade people that deficits are the principal danger facing the nation”.
President Obama collaborated with the Republicans by saying that the nation “must learn to live within its means, and we must get deficits under control”. This was a major mistake. When spending restraint leads to recession, Obama will not be able to push for more needed government spending.
By implication, the nation does not need to learn to live within its means, or get deficits under control.
The economy is weak due to a lack of spending by consumers. This situation requires the government to stimulate the economy with “government money”. Obama’s 2009 stimulus ($787 billion) was not large enough and spent itself too quickly. “Deficits caused by stimulus spending would be paid off later”, somehow.
The agreed-upon $2.4 trillion in spending cuts over ten years will starve the economy of money at a time when an infusion of money might help jolt the system out of its doldrums. The demand to cut government spending is “voodoo economics”.
The editorial stops short of joining the currently popular left wing attack on Tea Party-supported members of Congress for holding the government hostage to their demands for an end to deficit spending and rejecting tax increases to keep fueling Washington’s spending habit.
But the same issue of the Herald (August 3) features a New York Times commentary declaring that “Americans have watched in horror as Tea Party Republicans have waged jihad on the American people.” These extremists did this by almost preventing the United States government from issuing yet more debt.
Normal people would think that the term “jihad against the American people” would be reserved for Muslim fanatics flying airplanes into tall buildings.
The Herald editorial avoids mentioning the issue of taxes, but it’s safe to say that the Left ardently believes that there are rich people out there who have lots of money, and America’s fiscal problems (if any) would be solved if only Obama and Congress would summon the courage to slap them with much higher tax rates.
The top 5% of all Federal tax filers have incomes above $158,619. They pay 58.7% of all income taxes. (The bottom 47% of filers who report positive incomes pay zero percent of the total).
Liberals have never been willing to state just what percentage of income taxes these rich people ought to be made to pay. However they believe as an article of faith that jacking up income tax rates for the top 5%, or the even smaller percentage who report income in excess of $250,000 (for a couple), will preserve everybody’s entitlements, and pay for trillions of dollars of new “stimulus” spending for needed “investments” in public programs employing unionized workers.
They also believe that the “rich”, however defined for the purpose of relieving them of their wealth, may curse and moan, but will continue to create new wealth and jobs while paying ever higher rates on their incomes.
There is good reason to be skeptical of these beliefs.
Most sensible Americans, including all of the Tea Party supporters, believe that our national government, already $14.3 trillion in debt and with as much as $100 trillion in long term unfunded liabilities, cannot keep incurring a trillion dollars of debt a year by borrowing 40% of what it’s spending.
They believe that “stimulus” spending is a costly farce, and that we cannot jack up tax rates, even just on “the rich”, to keep this spending spree going.
They also believe that the ever increasing tsunami of regulation threatens to strangle our economy, especially the small businesses that are our major job producers.
To the Herald and its fellow believers, these concerns are delusional at best, and a “jihad against the American people” at worst.
As con artist Groucho Marx used to say, “who are you gonna believe, me, or your own eyes?”
John McClaughry is vice president of the Ethan Allen Institute.