Thursday, June 30, 2011

Spoonful of Sugar Could Help Deficit Go Down

"To whom much is given, much is required." - Luke 12:48

Noses to the grindstone.

Our illustrious Senate had planned on taking next week off for the July 4 recess, just as the House took this week off. But today, Senate leaders decided to make a statement of how dedicated they are, saying they're going to work next week instead.

Well, their definition of "work," anyway.

Since little progress has been made on the budget and reducing the deficit, President Obama held a rare hour-long press conference Wednesday to chide Republicans for stalling. That's partly what sparked the Senate's recess revocation, but not before House Speaker John Boehner reiterated that Republicans would not abide any new taxes, one of the concessions for which Democrats have been holding out.

Meanwhile, Democrats continue to insist that their own list of sacred cows - entitlements, mostly - cannot be touched by any meaningful spending cuts.

It's high noon in the steamy streets of midsummer in Washington, DC. Who's gonna blink first?

Partisanship Equals Ossification

Our elected leaders have made a science of not actually getting anything done, haven't they? This summer's budget standoff surprises only those people who still think politicians want elective office to be public servants. Of course, part of the reason Washington has ground to a halt involves years of partisan bickering and sniping which has ossified the Executive and Legislative branches like rusting machinery. Over time, the refusal to lubricate moving parts with compromise causes things to freeze into place.

Proving Newton's First Law, that stationary objects tend not to move.

Major freezing points lately include financial considerations like debt ceilings and extra taxes on the rich. Democrats want to increase the debt ceiling so they don't have to cut as many of their pet projects, while Republicans see plenty of waste that needs to be jettisoned from our ship of state. Democrats want to raise taxes on the wealthiest Americans, while Republicans claim taxing the rich means further destabilizing the economy.

Nobody wants to admit there's any middle ground on these issues. And on the debt ceiling debate, Republicans are correct: there is no middle ground. Little merit can be found in allowing the government to acquire more debt, since we can't even figure out how to pay down the debt we've already acquired.

But I see some wiggle room on the wealth tax thing, even if hard-line Republicans can't.

Swallow Hard

Although we're several years removed from the start of the Great Recession, it's hard to still insist with a straight face that more taxes on the uber-rich will cost America's middle class more of their jobs. Do Republicans who subscribe to that theory expect us to believe that America's billionaires are being generous to the workers of this country by letting the unemployment rate stagnate around 9%? If the tax rate for the uber-rich gets lowered, will unemployment go down? How come the unemployment rate shot up while income tax rates remained relatively stable? And how many billionaires actually employ the people working in their companies?

If these rich people were already subscribing to the basics of capitalism, like Republicans claim they are, shouldn't they already be employing the right number of people to get the work done that needs to be done? How does raising the taxes of the uber-rich reciprocally lessen the workload of ordinary Americans? Do Republicans mean that all of the layoffs which have taken place already might not have been the result of companies downsizing and offshoring, but high personal income taxes on the uber-rich?

Republicans need to be careful about the causal factors they attribute to things. It could trip them up in the long run.

Personally, I'm not all that crazy about taxing people more just because they're rich, either.  I can see how it's unfair to disproportionately penalize certain taxpayers just because they have lots more money than everybody else. The problems plaguing the US Treasury don't stem from not taxing people enough, but from making government too big and expensive. Why blame the uber-rich for that?

Plus, how many of these uber-rich folk exist anyway, since we keep hearing they comprise a fraction of the U.S. population? How much of their current income can be taxed at a rate which will put a significant dent in our national debt?

Of course, our federal government was bloated by the big-government spending of Republican George W. Bush, but that's a story for another day. Suffice it to say that Democrats, just as they're not entirely responsible for the current size of our bureaucracy, can't justify raising taxes for the rich just because, well, they're rich.

After all, budgets aren't entirely about money. You also need to factor in what you're spending the money on. In times like these, Democrats must face facts about programs we really, really don't need, and not assume the rich exist for the government's benefit.

How Much?

Yet disproportionate taxation, however unfair it may seem, is technically difficult to criticize from a Biblical standpoint. "To whom much is given, much is required" may on the surface read as a simple equation, but is it? It's easy to read the verse as saying this: if taxpayer A has a greater income than taxpayer B, even if they're taxed at the same rate, the taxes A pays are going to be more than B's because A earns more. But is this the scenario described in Luke 12:48?

Check out the various translations of this passage, and you'll see that Christ is not talking about a simple equation, but an exponential increase in what is expected of those who have gained much. Fight me on this if you want to, but remember, these aren't my words to begin with.

So, yes, while on one level, taxing wealthy people at an excessively disproportionate rate can be considered unfair, it's not without Biblical precedent. Although it's hard to believe increasing taxes on the uber-rich will legitimately lower our deficit, the real lesson for America's top wage earners is that compounded interest doesn't work solely in their favor.

Adding the Sugar

If the uber-rich did have their taxes increased, I've had some hair-brained ideas about how that might work.

For example, what if they were taxed in proportion to the income they obtained as the beneficiary of government entitlements?

If our uber-rich taxpayers owed a chunk of their wealth to the subsidies our government grants their enterprises or industries, doesn't the Treasury deserve to recoup some of that capital on behalf of the taxpayers who've "invested" with them?

What's wrong with taxing, say, the incomes of executives in the oil and gas industry according to the $4 billion annual subsidy their industry received from our government?

What about Wall Street brokers, bankers, and executives at Chrysler and General Motors, whose paychecks have remained liquid thanks to the largest taxpayer bailout in American history?

After all, Republicans say they hate entitlements and subsidies. So why not prove to intransigent Democrats that giving parts of them back isn't as painless as it would seem.

Not that I'm a Communist or hater of rich people. To prove it, I'll go a step further (this is all hypothetical anyway - this kind of logic never works in real life.) How about this caveat: allowing the uber-rich, when paying their increased taxes, to extract a type of matching grant from the government! For each extra dollar the wealthy pay out in taxes, they get to require Washington to cut a dollar from its budget.

So if $200 billion gets raised by hitting up the uber-rich for extra taxes, the politicians have to slice $200 billion from the budget, over and above anything else that gets cut during the normal budgeting process.

That way, maybe the medicine could go down with an equalized amount of bitterness between both the top earners and everybody else.

After all, we could fight over the necessary medicine until the patient dies. At which point, my ideas might actually look preferable.

How desperate are we going to have to get?
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