January 10 2013
What we see in Washington on a daily basis is a clash between two world views: conservatives who want smaller government and lower taxes and the Democrats who want more government and higher taxes.
Interestingly, as George Will points out today, the Democrats flinched from doing what will be necessary to support their beloved expansion of government: raise taxes on the middle class.
Democrats not allergic to arithmetic must know the cost of their “fiscal cliff” victory. When they flinched from allowing all of George W. Bush’s tax rates, especially those on middle-class incomes, to expire, liberalism lost its nerve and began what will be a long slide into ludicrousness.
I am glad they lost their nerve on taxes. But we are still left with the question of how we are going to pay for the government they are so irresponsibly expanding.
The fiscal cliff deal may have put Dems in an awkward position vis a vis more tax hikes on the middle class. Indeed, Will says they won't be able to increase the percentage of GDP gobbled up by taxes because Republicans will insist that the revenue question was closed by the Taxpayer Relief Act.
But we are still going to be in a revenue bind:
No numerate person thinks that today’s entitlement state, let alone the steady expansion of it that is liberalism’s aspiration, can be funded by taxing the income of the 0.7 percent of taxpayers whose rates were just raised. Or the 2 percent whose rates would have been raised had liberals and their president simply allowed the automatic increase of rates for individuals earning more than $200,000 and couples earning more than $250,000.
Because 82 percent of American earners pay more in payroll taxes than income taxes, no politically conceivable or economically feasible middle-class tax rate can fund the entitlement state. And America’s political culture rules out funding it with new consumption or energy taxes. By rescuing almost everyone from the restoration of Clinton-era rates, liberals abandoned any pretense of paying for their program of ever- expanding entitlements. Instead, they made trillion-dollar deficits their program.
From 1950 to 2000, economic growth averaged 3.6 percent; since then, it has averaged less than 2 percent. Liberals think today’s correlation between the slow economic growth and rapid governmental growth — including under George W. Bush — is a coincidence. Conservatives do not. And they note some recent actions, done in December’s bright light of public attention and fiscal anxiety, which indicate that this government’s indiscipline is incorrigible and shameless.
Even some Republicans are outraged when Congress is slow to spend on something they want: witness the outrage when the mammoth spending over Hurricane Sandy was held up briefly. Those who decide to live in places where natural disasters are likely to occur and wipe them out, Will notes, expect you and me to subsidize their insurance.
We are in very serious trouble, but Will sees a solution: rallying around a balanced budget amendment.
Currently, the Senate has 45 Republicans, well short of the sixty-seven Senate votes needed to send a proposed amendment to the states.
If the GOP could get six more votes, they would regain control of the Senate. They might find it possible, with a well-crafted balanced budget amendment proposal, to peel away some of the craven Democrats who “threw the remnants of their fiscal self-respect off the cliff.”