Jeff – My response is so long I made it a post. Firstly, I’m going to dispute the interpretation of some of what you imply in the previous post. In particular – “Bush takes office and conditions start to deteriorate”. Second, I think we are probably not that far off in our world-view or opinions on what should be done next.
I hate revisionist history. The “Bush” recession was caused not by W, but by the Internet bubble bursting, starting an economic decline in the last quarter of the Clinton administration. Bush took office in Jan, during the quarter when the recession began. Hard to make the case that he caused a recession in the first 60 days. Arguably, his immediate tax cuts assured that recession was one of the shallowest in history, until of course September! Was the guy really so bad that the idea of him started a recession? (wait – don’t answer that)
I say this not to blame Clinton for the bad economy that Bush was saddled with as he came into office, but just to clarify fact. The recession was no more Clinton’s fault than the economic turbulence that followed 9/11 was Bush’s fault. The economy is cyclical; the individual occupying the oval office cannot prevent recession, but can impact how quickly we come out of them.
You’ve hit the nail on the head though in terms of the tax code. Tax code is the problem as pointed out by the deficit and debt commission. A more fair and simple tax code, with a lower rate than today, would actually collect MORE revenue, and is fundamentally fairer than the current system. Wealthy Americans would pay more. But those who pay nothing would pay some.
I am doubly impressed at you advocating this in spite of the fact that this tax code would raise taxes on the middle class and poor, most importantly, the 47% of Americans who through credits and subsidies pay zero taxes yet receive plenty of benefits.
I am fully for the debt commission’s recommendations, as a conservative, and fully understand that they represent an increase in taxes across the board, and disproportionately put the burden on wealthy Americans (as is currently and will always be the case).
Look at the social security “bailout” for example. The retirement age is increased slowly over a period of 65 years and COLA’s are reduced. The system is then saved by removing the cap on social security income taxes.
This is sacrifice? This means that the program will be funded by wealthy Americans, who through means testing, will pay more taxes and receive lower benefits. Only because I like the cuts in other areas, will I say this trade-off is worth making. Interesting enough, conservatives hate the social security recommendations because they don’t really cut anything; progressives hate them because they think they cut too much.
Back to Bush. Bush’s mistakes were not that he cut taxes. It was that he kept cutting taxes in the face of two wars. Then created a huge government entitlement called Medicare Part D. His were not flaws of policy, they were flaws of timing and failing to react to what was happening in front of him, while blindly following the domestic plan he had in his head before 9/11. Obama is doing the same, blindly following the plan he had in his head as a community organizer in Chicago, and failing to react to conditions on the ground.
That could be the big tragedy of being President. You have grandiose plans, and in the campaign the people demand you tell them exactly what you are going to do. The fact is until you become President, you have no concept of what you should/can do.
Bush did not cause this problem, nor did tax cuts, nor did Obama or Clinton. We (the royal and collective we) caused it by being apathetic and complacent about our government for the past 40+ years, and by believing that Europe has some monopoly on civilized society. Spending more than we have caused the collapse in the private sector, and spending more than we have will cause the collapse of the pubic sector. Period.
I reject the premise that our ills are caused by the W. tax cuts, or tax cutting policy in general, or even the notion that wealthy Americans are not already disproportionately burdened with the costs of social justice. But agree with you on what needs to be done.
I think the President needs to address those well-off directly, look them in the eye and say “I’m sorry, we’ve messed up for the last 40 years, and we need more of your help to get out of this mess. You’re not bad because you make lots of money, we just need more of it, and we promise not to be irresponsible this time”
Isn’t that better than telling them that their kids are going to private school with blood money stolen from the poor?
For the record, I am for letting all the tax cuts expire for everyone, or for overhauling the tax code as Simpson and Bowles recommend. There are only two levers; revenue and expenditures, both must be pulled.
Guest Blogger Jeff