Don't think taxing 'the rich' can get us out of this bind

April 14, 2011|By Ron Smith

The Congressional Budget Office says the spending bill negotiated with such fanfare by President Barack Obama and House Speaker John Boehner will cut this year's federal fiscal deficit by only $353 million, which is a far cry from what we were told would be $38 billion in reductions. As someone once said to me, "I'm no intellectual, but I can count."

Since even the latter figure is nearly nothing at all considering that last month alone we added $200 billion to the deficit, what we are witnessing coming out of this budget battle in Washington is nothing more than farcical.

As a comparison easily understood, the tragedy in Japan, the most expensive natural disaster in history, is estimated to eventually cost $300 billion.

Roll that around in your mind, and then consider that our government is spending an estimated $50,000 per second more than it takes in. Per second!

The budget deficit is projected at $1.6 trillion this year.

Getting even this minuscule reduction in spending causes the Republicans on the Hill to claim victory, while the Democrats rise in unison to sound the clarion call of class warfare, accusing their political rivals of wanting to destroy the social fabric through ruthless Social Darwinism.

President Obama addressed the nation Wednesday, looking to regain the upper hand in the budget battle, proposing more reductions in defense and domestic spending than he had in his original proposal made two months ago.

He also called for an end to the Bush tax cuts that were extended earlier and for the removal of other tax breaks for the wealthiest taxpayers, including those for mortgage interest deductions. In wording that infuriated his political opponents, Mr. Obama also called these higher taxes "spending reductions in the tax code," a phrase Orwell would have no doubt appreciated.

The president claimed that his plan would trim $4 trillion from accumulated deficits by 2023, and suggested Congress pass what he called "a debt failsafe" trigger that would mandate big cuts if the budget deficit doesn't begin to stabilize in the next three years.

"By 2025," the president said, "the amount of taxes we currently pay will be only enough to finance our health care programs, Social Security and the interest we pay on the debt."

That's just not true. Social Security, Medicare, unemployment payments and welfare consume all of the taxes paid to the government right now, in 2011, 14 years earlier than he claims.

But true to the Democratic playbook, the president railed against "the rich," saying "those who have benefited the most from our way of life can afford to give a bit more back."

Leaving aside the contentious argument over what constitutes a rich person, it is a fact that the top earners in this country pay the bulk of the income taxes. The top 20 percent paid 69 percent of the tab at last count; the top 1 percent forked over more than 28 percent of income taxes collected.

If a 100 percent tax rate was applied to "the rich," it would pay for only a few days of our monumental government spending.

I'm as critical as anyone of the cozy crony capitalism that has the taxpayers footing the bill for the ongoing bailout of Wall Street and its rapacious top executives, but we must remember this is collaboration between Big Business and the Big Government it has purchased.

In his book "The Pleasures of Philosophy," Will Durant said, "Democracy is the matrix in which oligarchies grow." We are living proof of that.

He described politicians as being chosen "for political activity in the American sense — i.e., the ability to get themselves nominated, advertised, applauded, and elected."

They are, he added, "subservient people, amenable to discipline, elastic of conscience, and free from dangerous originality or genius."

Upon taking office, they are overwhelmed by the vast problems they are supposed to solve. As government grows in complexity, they must give way to selected experts. This is why the executive branch has, over the decades, gathered more and more of the governing power. It is the White House that is armed with expertise.

In our own time, it appears likely we have reached the point where the accumulated problems are overwhelming not only the politicians, but the vaunted experts as well.

Much unpleasantness lies ahead.

Ron Smith's column appears Fridays in The Baltimore Sun. His email is rsmith@wbal.com.

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