Most of what we hear out of Washington, from Republicans especially but also from Democrats, is that the federal deficit has grown so much that if we don’t address it now, our economy will enter rapid and permanent decline. And yet our elected officials are negotiating to extend temporary tax cuts, not just to the middle and working classes who at least would pump most of the money from an extended tax cut into the ailing economy, but for the wealthy, who judging from the past, will invest it in ways that do not create additional wealth, e.g., into hedge funds, the stock of existing companies and art created by deceased artists. To get this new tax cut, Republicans and some Democrats are holding hostage an extension of unemployment benefits, a necessary expense in a moral nation that wants to keep large numbers of its citizens from losing their homes.
The biggest farce of all is the National Commission on Fiscal Responsibility and Reform, which officially announced its plan to “lower the deficit” last Wednesday. Funny, the commission calls its report, “The Moment of Truth,” when in fact it is full of distortions in its overall strategy and the rationale for its specific proposals, especially regarding our only financially strong program, Social Security.
Most commentators and politicians are giving the co-commishes a large “attaboy” or three for taking on the onerous task of addressing the deficit, but then wring their hands that Congress won’t pass the plan because of political gridlock and short-term thinking and isn’t that too bad.
For example, in the “Week in Review” section of the Sunday New York Times, Matt Bai postulates that the report will go nowhere and then asks why Americans who long ago sacrificed to win wars don’t want to sacrifice to eradicate the deficit. His answer: “What makes this case for sacrifice so much harder to embrace, perhaps, is that it goes to our national psyche, threatening our self-image as a land with limitless potential. While past generations have readily sacrificed for national greatness, debt reduction — at least in the gloomy way its advocates argue for it — feels like a call to sacrifice in the name of our national decline.”
Bai’s article explores this hypothesis with broad-stroke history and standard ideological assumptions about the free market and lifestyle expectations. He proposes that the problem is merely that advocates of deficit cutting must repackage their proposals by focusing on the assumed positive outcomes.
But that dog won’t hunt, it won’t bark and it won’t even roll over to scratch its back against the carpet, because anyone who reads the plan will see its not-too-hidden agenda is not to address the deficit but rather to reduce taxes on the wealthy.
A brief look at the plan should be enough to convince most that the commission should change its name to “National Commission to Lower Taxes for the Wealthy.” Throughout the document it calls for sacrifice, and yet it proposes to give a bonus to the wealthiest of Americans. Why don’t rich folk have to tighten their rather large belts with everyone else?
In the latest Nation, Professor Leon Friedman of Hofstra Law School estimates that if the National Commission on Fiscal Responsibility and Reform’s plan becomes law, the top income group will get a reduction of 12% off their taxes. Friedman, by the way, proposes a one percent annual tax on the wealth of anyone with $5.0 million or more in assets, something they do in France. That sounds like a reasonable way to reduce the deficit and invest in our infrastructure and economic future without hurting anyone, since $50,000 a year is not a lot of money if you have five million tucked away.