By the time you read this, I am confident an agreement will have been reached and the debt ceiling raised, as it has become a necessary evil as a result of unchecked spending. If, by some yet unseen road block, the ceiling remains unchanged, I am also confident that Armageddon will not occur — that the United States will not default on its obligations. And, Grandma and Grandpa, do not be afraid: Your Social Security checks will have arrived on time.
The most perplexing and difficult thing to understand is just how we managed to arrive at this financial precipice without the president and the Senate anticipating the trouble ahead in River City. It is hard to believe the president and his party failed to recognize the mood of the electorate in the landslide victory of Republicans in November 2010 in winning back the House and gaining six seats in the Senate.
Perhaps Democrats chose to ignore the loss as a meaningless phenomenon, as the late ABC News anchor Peter Jennings chose to dismiss the Republican Congressional takeover of 1994: “The American people threw a temper tantrum.” They should have recognized there was a new order in the offing when they could not pass the “business as usual” spending resolution at the end of 2010 and were thwarted from ending the “odious Bush tax cuts for the wealthy” when the majority of economists sided with the Republicans in the obvious danger of raising taxes during a recession. Albeit grudgingly, the administration agreed.
Among the themes of common knowledge by virtually all concerned from the seating of this 112th Congress were that the debt ceiling had to be raised, that deficit spending was averaging more than $1.5 trillion annually for 2 ½ years, that the debt ceiling would not be raised without concurrent spending cuts and that the Republicans would not acquiesce to raising taxes.
With full knowledge of this climate, the president offered a budget in February calling for the highest spending in history; it received bipartisan rejection: The vote was 97-0. In April, he demanded Congress pass a debt ceiling increase — one that was “clean,” including not one solitary spending cut. Not until the House passed sweeping budget reform did the White House climb on the bandwagon of reducing deficit spending.
The current impasse has been fueled by the Senate’s insistence that entitlements not be cut, the White House demand that health care, green projects and high-speed rail be off the table and that any hike in the debt ceiling be large enough to slide through the 2012 election. The straw that broke the camel’s back, halting the negotiations between President Barack Obama and House Speaker John Boehner, is the president’s insistence in raising taxes on “those who can afford to pay more” as a condition in raising revenue to offset the cuts.
It is here that we see a favored ploy raise its ugly head again — the Robin Hood class-envy tactic wherein the wealthy become the villains. President Obama has played this theme to the hilt, calling on the wealthy (those millionaires and billionaires who make $250,000 per year) to “pay their fair share” in taxes. Everyone knows the Republicans ignore the middle and lower classes and pass on tax cuts exclusively to the wealthy — we know this because the Democrats tell us so. Would they lie? But, just what is their “fair share?”
Contrary to what we are led to believe, the rich are not exempt from paying taxes. For example, the 2008 tax year shows the top 1 percent paid 38 percent of income tax revenue, the top 5 paid 58 percent, the top 25 paid 86 percent and the top half paid 97.3 percent, according to the National Taxpayers Union. We also see that the bottom 50 percent paid but 2.7 percent — that more than 40 percent pay no income tax at all, many of whom receive an “earned income tax rebate” for not earning enough to be taxed.
Attacks on the “fat cat rich and Wall Street bankers” may play well in some arenas, particularly among those voters who pay no taxes but, just who is not paying their fair share? Since 2002 and 2003, the Democrats have demonized the Bush tax cuts as a boon for the rich, ignoring that the cuts provided tax relief for anyone who actually paid taxes. And anyone who can count past 10 without removing one’s shoes must realize that when taxes are cut, those who pay the most also benefit the most.
Ironically, in today’s reversal of form, the Bush tax cuts are trumpeted as the savior of the middle class; however, those accruing to the wealthy are an abomination as they can afford to pay more. Never mind that the government could appropriate all earnings over $250,000 per year and fail to dent the deficit. This quest for tax increase must be recognized for its two-fold intent — to increase that available for spending and to get to the next election by kicking the can down the road.
The requirement for more revenue to cut deficit spending and pay down the debt is not a matter of dispute. But, the only operative path to that achievement is to have more people paying taxes by increasing employment. The notion of levying yet more taxes on those who already pay the lion’s share as a solution defies logic — what happens when the government's perceived need exceeds the number of pockets to be picked?
The government does not create jobs; instead, it has a responsibility to create a climate conducive for the private sector to produce new business opportunities, expansion of existing businesses and investments, all of which stimulate employment. Raising marginal tax rates on those most capable of stimulating the economy is hardly a recipe for producing a lasting economic recovery.
J. Karl Miller retired as a colonel in the Marine Corps. He is a Columbia resident and can be reached via e-mail at JKarlUSMC@aol.com.